Day Trader Don’ts
It sounds like the ideal life. Rather than reporting to an office or waiting on tables every day, you’re going to sit at a computer at home in your pajamas, making quick buy-and-sell stock decisions and racking up bucket loads of cash. Well, hold on to your wallet, hotshot. Here’s a reality check.
1. Don’t Bet the Farm
The harsh reality: Most day traders lose money big-time. So never day-trade with money you need for routine living, tuition money, or retirement funds.
(Photo courtesy of iStock/Miodrag Gajic)
2. Understand the Expenses
Many day-traders have to pay the company they’re affiliated with enormous commissions in exchange for training and equipment. They work with borrowed money and can quickly ring up mountains of debt. Given the hefty expenses, have a clear idea of what it takes to turn a profit in this scenario.
(Photo courtesy of iStock/Bogdan Kosanovic)
4. Consider Your Source
Once you become known as a day trader, you will be barraged with hot “insider” advice, primarily from people who are trying to drive up their own investments. Don’t act on advice if you aren’t sure of the source.
(Photo courtesy of iStock)