How to Learn to Day Trade Without Breaking the Bank

Learning how to day trade can feel a bit like trying to navigate a new place without GPS. Could you figure it out without a map and without a knowledgeable contact? Sure, you could! But having guidance will save a lot of time and effort, and make for a more enjoyable experience.

In this post I’m giving 10 steps to take you from not-a-clue to placing a first (demo) trade as quickly as possible. Time is more valuable than money, so let’s not waste any more of it!

Step 1: Set Realistic Expectations

I’m stressing this as the first step because if you get this right, everything else is easier. This is where so many traders get tripped up; they think they’ll learn to trade in three months and be able to quit their jobs, and that’s not typically how it works. Having unrealistic expectations makes the entire process much more frustrating and sets you up to continuously “miss” deadlines and goals that shouldn’t have been set to begin with. Patience is key.

Day trading isn’t a lottery ticket or get-rich-quick scheme. There is no secret strategy that magically works 90% of the time without putting in any effort. Day trading is a high-performance skill that requires a little bit of an investment to get started, and quite a bit of time and effort to master.

The sooner you accept that trading is a craft that requires lots and lots of practice, the quicker you’ll improve. When the pressure to achieve consistency and profitability within a certain amount of time is removed, the less frustrating the learning process will be.

Step 2: Choose a Market and Product

Will you trade stocks, futures, forex, options? Your schedule and time zone may dictate what you trade. Take some time to research which market interests you. I started out trading futures, drifted to forex, then returned to futures and haven’t looked back. I find the futures market to be great for beginners because of the liquidity, which means there are plenty of trade opportunities for learning. Additionally, the various assets have different contract price points and personalities. Traders can find an asset that works for their individual risk tolerance.

Whichever market and asset you choose, commit to sticking with it for at least a few months to give yourself time to get to know them.

Step 3: Pick a Trading Platform

In order to view charts and place trades you’ll need a trading platform. There are many platforms to choose from and sometimes the options are limited by the broker. If you’re a beginner trader, I don’t suggest opening a personal account with a broker right off the bat, so I won’t cover that in this post. Instead, I suggest picking a platform, subscribing to market data, and then demo trading (also called paper trading) until you have mastered a strategy.

My favorite platform by far is TradingView. It’s a beautiful platform that connects with many brokers (when the time comes) and has highly customizable charts. There are plenty of indicators available and if you want something unique, it’s simple enough to code it yourself with the help of AI or find someone to do it for you. I also enjoyed using Sierra and NinjaTrader for futures and MT5 for forex.

I think the best part about TradingView is that there is a free option, the Basic. It’s fairly limited in that it allows only one chart per tab and two indicators on a chart, but I think it’s enough for a beginner who should focus on only one asset at a time. It’s also enough to get a feel for TradingView before committing to a paid plan. If a trader wants more than this, the Essential plan is reasonably priced and has a 30-day free trial. If you choose to subscribe, here’s a link for $15 off TradingView!

In order to see live market info instead of at a delay, you’ll need a data subscription. You can learn how to trade on delayed data, but having real-time data is beneficial to get a feel for the overall timing of the market. If you already have a broker account, you likely don’t need to purchase live data. You can purchase a data plan through TradingView or other platforms at reasonable prices (around $10/mo).

Step 4: Pick a Strategy

There are many strategies readily available on the internet. How do you choose? My philosophy on strategies is the simpler, the better. If the strategy requires so many indicators and entry criteria that you fall into analysis paralysis, it’s no good.

The trickiest part about picking a strategy is that each person is unique; relationship with money, risk tolerance, anxiety levels, past experiences are all unique to the trader and impact a trader’s preferences. If 10 people learn the same strategy, in the end you’ll end up with 10 different trading plans centered around a single strategy. What one person sees on a chart will be completely different from what another person sees, but their trades might appear similar.

Initially, pick a strategy that is appealing to you. The reason doesn’t matter. Spend time exploring it and tweak it based on your experience with the market. It’s ok to make another’s strategy into your own as you develop as a trader.

Step 5: Create a Simple Trading Plan

After you’ve spent a little bit of time with a strategy, write down how you use it. This plan should fit on one page of paper and include:

• Timeframe

• Indicators used

• Asset(s) traded

• Trading hours

• Setup criteria

• Entry criteria

• Stop loss / risk parameters

• Profit target / exit rules

• What negates the setup

• Additional notes

Once your plan is written down, it becomes the boss. If the chart shows your setup, you start looking for your entry. Once your entry appears, you enter regardless of whether your brain agrees. The plan says jump when the candle closes above a certain level, you jump! No more overanalyzing or overthinking in the moment.

Step 6: Practice in Sim or Demo

This is another step that could’ve been stressed at the top of this post. Trading with real money before mastering a strategy is a recipe for disaster. Demo, paper, or sim trading is a way to get the reps in without risking your own money. Many trading platforms offer either a sim account or the option to turn off live trading on the account.

When practicing, place every trade with intention, according to the trading plan, and according to the account size you plan to eventually trade live. If you plan to trade a $50k account, practice with a demo account that size. Practicing with a $100k account can result in unreasonable expectations regarding potential profit and risk per trade.

Step 7: Track Your Trades

Tracking or journaling trades is one of the most powerful parts of the learning process. Documenting trades allows you to see patterns as you trade. Weaknesses become more apparent as you write down reasons for every entry and exit.

A simple notebook and pen or pencil is all you need to document trades at the beginning. There is benefit to writing notes by hand, taking the time to think through your trade afterwards. If you take so many trades that you can’t fathom how you’d be able to track them by hand, take a look at your trades and see if you really need to take that many trades per day.

There are many parts to track, but these items are good to start. As you progress, you may choose an online trade journal to track your stats automatically.

• Reasons for entry / the name of your trade (if you’ve named your setup)

• Size of trade

• Entry and exit prices

• Times of entry and exit

• Stop loss price and risk amount/percentage

• Emotional state before, during, and after the trade

• One thing you did well

• One thing to improve next time

At the end of each day, note the main takeaway of the trading day. At the end of each week, review your trades and pick one thing to work on the following week. Write it down somewhere that you’ll look so you remember to focus on it. Practicing this way, documenting trades and regularly reviewing them, will make for faster learning.

Step 8: Trade Small & Control Losses

Trading too large and allowing large losses can cripple a great strategy. This is where the mental aspect of trading comes into play. Building the discipline to trade according to the account size will keep the account balance safe. Keeping every loss to a reasonable amount helps the account to grow as the profits outpace the losses

What is a reasonable size to trade or a reasonable loss amount? This will depend on your risk tolerance and account size. A good rule of thumb is to never risk more than 1% of the account balance on any single trade. As a beginner, you might consider keeping it to .5%.

Step 9: Ignore Profit

It’s too easy to get caught up in how much money traders can make or lose. Profit and loss can become a distraction from the main focus, which should be honing the trading skill, learning to execute according to the plan. Once the strategy is mastered and you can trade without thinking, the money will come. Removing the PnL amounts from my trade brackets was a huge game changer for me. I no longer made decisions based on the amount of the trade but strictly on what the market was telling me.

Step 10: Think Why Not Me?

People can and do learn to trade successfully. The difference between the people who reach consistent profitability and the people who don’t is persevering through the learning curve. You can do it too! You’re not too old or too late or too inexperienced with money or too irresponsible or too scatterbrained or too <insert whatever bad thought you have about yourself>.

The amazing thing about learning to trade is that with the skill comes discipline; there is no way around becoming more disciplined in your life as you advance as a trader. So whatever things you think about yourself now, those thoughts can change. You CAN learn to trade like others have. So when you’re struggling, think, “Why not me?”

Final Thoughts

Learning to day trade isn’t easy, but it is doable. If there is a holy grail to day trading, it’s not the perfect strategy, it’s intentional practice and time. Place every trade with diligence, according to your trading plan, and improvement is inevitable. Practicing like this over and over until the skill sticks will lead to consistency, which will lead to profitability. Look at every mistake or loss as an opportunity to fix it now and avoid it in the future when real money is at play.

Happy trading!