Day trading is risky and exciting, but — for some of us, anyway — it’s rewarding enough to be worth all of the stress and the ups and downs. As day traders, we answer only to ourselves. We’re all alone out there, surviving on our wits in a cutthroat and unforgiving marketplace. That’s a huge part of the appeal of day trading: Win or lose, we’re on our own. We’re free solo climbing — no ropes, no help, and huge risks and rewards.
Only that’s not totally true — or, at least, it shouldn’t be. Good day traders rely on their own brilliance, but they’re also smart enough to realize that they shouldn’t be going it alone. Other experts are out to help out savvy day traders, and there are tons of resources that every day trader needs, from a financial safety net of their own to the support of other day traders in a community. Here are a few resources that good day traders rely on.
A big emergency fund (and a retirement fund, too)
The more money that you put at risk in your day trading account, the more money you can potentially make. But that doesn’t mean that you should put every dollar that you have at risk. In fact, doing that would be pretty stupid!
As a day trader, you’ll have times when you don’t succeed. You’ll need money to make up the difference on those days when you can’t seem to do anything right, and that means that you’ll need an emergency fund. In fact, everyone needs a good emergency fund — it’s just that, as a day trader with an unpredictable income, your emergency fund should be a bit larger than most people’s. Keep your emergency fund in a safe spot, such as a savings account.
Protect your retirement fund, too — keep it in safe long-term investments. Day trading tends to be very high-risk, high-reward, which is not exactly the kind of all-or-nothing proposition that you want to be looking at for retirement. Day trading your retirement fund is a good way to destroy your finances for life, so you don’t want to roll the dice with your long-term financial security.
Charts, calculators, and spreadsheets
No matter what investment strategy you’re using, you’re probably going to need to crunch the numbers sometimes. No day trader should be without reliable tools such as stock percentage calculators and spreadsheets that will quickly run formulas and populate cells with essential information.
Which tools you’ll want to keep at your fingertips will be up to you. You’ll probably find a few valuable things built right into your brokerage account. It’s never a bad idea to have a calculator out, either — or get an adding machine for your desk, which will print a physical receipt that tracks your figures.
Working from home can be really rewarding. You have no office dress code, no office politics, no boss looking over your shoulder, and no fights over the last cup of office coffee. But there are drawbacks, too. People who work from home have to be disciplined to stay hard-working and productive without anyone around to keep them accountable. And, of course, working from home can get lonely.
For the sake of your mental health, it’s a good idea to get involved in online communities, particularly those focused on your chosen trade. You can find lots of fun ones, such as Reddit’s /r/wallstreetbets. Engaging with other people can give you the good parts of working in an office — friends, camaraderie, and feedback on your strategies — without all of the bad parts that frustrate office workers.