Best Way to Learn Day Trading Stocks for Beginners

There’s a reason why so many people want to learn how to day trade.

It’s exciting and potentially profitable — plus, it’s easy to get started and you can do it from anywhere.

Unfortunately, many new traders jump into the game without understanding how day trading actually works, resulting in frustration and costly losses.

You don’t have to be one of them. If you want to know how to get into day trading, you’re in the right place.

While there’s no single best way to learn about day trading, there are several resources, tools, and strategies that can help set you up for long-term success. Let me tell you all about them, plus educate you on some of the risks associated with this potentially-lucrative activity…

What is Day Trading?

Traditionally, retail investors purchase shares of a company’s stock with the intention of holding for years.

A day trader, on the other hand, holds positions for less than a day.

Why?

Day traders typically aren’t concerned about the fundamental health and long-term potential of the behind a stock. Rather, they’re trying to profit off short-term price movements.

Traders rely on technical charting to find trends in stock prices, which can help them anticipate profitable trades.

Why the stock moves is of little concern — but the size of the move is. The greater the movement in price, the greater the potential payoff.

What You Need Before You Begin Day Trading

Want to know how to get into day trading? Start here:

1. Choose an asset class

Day traders tend to focus on a single asset class. Most day traders focus on stocks or options.

• Stocks are a security that gives you a small piece of ownership of a company.
• Options are contracts that give the owner the right, but not the obligation, to buy or sell an asset (often stock shares) based on meeting predetermined criteria.

2. Determine your risk tolerance

In finance, risk typically refers to volatility, or the frequency and magnitude of a security’s average price moves.

For example, consider these two scenarios:

• A security that regularly trades between $10 to $20
• A security that trades between $14 and $16

The former — the security that has bigger average price swings — is less predictable and therefore riskier.

Of course, more risk can also equate to a higher potential payoff.

That said, the most important rule when considering your comfort with risk is this:

Invest only what you can afford to lose.

There are no guarantees in the stock market. Even the most successful day traders have losses. This fact cannot be stressed enough.

So what asset class is riskiest? In general, the risk hierarchy goes like so:

• Stocks are considered more volatile (risky) than bonds
• Options are considered more volatile (risky) than stocks

Options, in particular, can offer traders immense payoffs with minimal investment.

The catch? Options contracts involve a type of leverage, or the ability to make bets worth orders of magnitude more than their actual invested cash amount.

Of course, if the bet is incorrect, you could be on the hook for a leveraged, outsized amount that exceeds what you put into the trade.  

For this reason, options are often considered one of the riskiest asset classes to trade. It’s imperative you understand the risks associated with various options contracts and strategies before trading them.

3. A strategy to employ

Successful trading shouldn’t be like throwing darts at a board to see what sticks.

A time-tested strategy can give you an edge in the markets and keep you disciplined. It can also help limit emotional trading, where good money can be thrown after bad.

Over time, most day traders develop their own strategy. But to get started, you’ll probably need to study what successful traders who came before you have done. Options trading alerts are a great way to get trade ideas when you’re starting out.

Day trading courses can help you understand strategies that have a history of success. Here are two suggestions:

• Investors Underground offers a vast library of educational resources and ecourses. It’s not cheap, but the curriculum is exceptional and backed by strong reviews. If you’re serious about day trading, you should strongly consider the investment.
• TD Ameritrade’s free courses include strategy guides to help you choose and refine your preferred trading approach.  

It’s worth taking the time to develop a strategy. Without one, you might get lucky initially, but you’ll lack focus and direction, which could take you out of the game early.

4. Practice

Paper trading, or simulated trading, is a great way to get familiar with the ins and outs of day trading without sacrificing real money.

Even established traders will use paper trading platforms to test out new strategies, hone their skills, and deepen their understanding.

Our favorite platform? eToro, which lets you trade with $100,000 of virtual dollars. (Check out our other top picks here.)

Repeated practice is one of the best ways to learn about day trading. No matter how much you read about stocks, doing the “reps” is what really builds those trading muscles.

How Much Can You Make Day Trading Stocks?

If you ask Zip Recruiter, the average employed day trader in the United States earns nearly $77,000 annually.

Of course, that metric is based on professional, employed day traders. That’s a lot different than the average day trader who works from home.

Day trading is usually not a 9-to-5 job, so it’s important to adjust your expectations.

Here’s what every new day trader needs to know…

• There’s no limit to the amount of money you can make day trading stocks.
• But it’s also possible to lose everything you put in — or even more, if you’re a short seller.

Typically, if you want to make more money as a day trader, you’ve got to:

• Trade larger amounts (i.e., invest more money in a particular stock).
• Trade more volatile securities

You see what I’m getting at here. The greater the risk, the greater the potential payoff AND potential loss.

How Much Can You Make Day Trading Options?

Like with stocks, there’s no limit to how much money you can make.

However, options typically allow for a more accelerated profit or loss.

What does that mean? Since options involve a sort of leverage (i.e., you can bet more than you have in cash), they can provide larger payoffs than stocks — as well as more substantial losses.

The 3 Best Day Trading Tools

If you want to get started day trading the right way, consider investing in these tools:

1. Computer – Top Pick: Radical X12 EZ Trading Computer

Technically, you could trade solely from your phone, but I don’t recommend it.

But what type of computer is best for day trading?

While you don’t require top-of-the-line equipment, better performance via higher RAM can help ensure your trades are executed quickly.

Our favorite computer for day trading is the Radical X12 EZ Trading Computer. At $2,999, this CPU packs a powerful punch.

Check out more details here — including a promotion to elevate this desktop with an impressive 64 GB of RAM and an Intel Core i9-13900KF, 24-core, liquid-cooling processor.

2. Online Brokerage and Charting Platform – Top Picks: TradeStation & eToro

Your broker is like the bridge between you and trades. Don’t just go with the first or cheapest one you find.

Online brokerages can offer a wide range of pricing, execution performance, and research tools, like charting software. Here are our favorites:

• When trading stocks, TradeStation is our favorite. Its clean interface makes it an excellent candidate for day trading for beginners, and its rapid execution ensures traders on the platform have an edge. (Find our comprehensive review here.)

• Alternatively, when it comes to trading options, eToro takes the top spot. With no commissions or fees on options contracts, a modest $50 account minimum, and a user-friendly interface, eToro is easily our favorite options-trading platform. Read more about eToro and other option trading platforms here.

3. Alert Service – Top Pick: The Trading Analyst

Many day traders use alert services, or services where veteran traders send buy/sell signals of each trade they’re making.

Alert services are particularly valuable for traders who still have full-time jobs.

Not all day traders can spend every hour the market is open glued to their computer screens. Alert services can allow you to focus on other work without worrying you’ll miss critical signals pertinent to your trading strategy.

Our pick? The Trading Analyst. Here’s why.

First, the variety. You get a lot of alerts:

Swing Trade Alerts: The Trading Analyst sends out both entry/buy and exit/sell signals (alerts) on both options and stocks. Alerts are sent in real time via SMS, email and are now also broadcasted through the site’s exclusive private Telegram channels (with custom charts). Every position they enter is updated in their real-time Portfolio tracker with targets and stop/loss parameters.

They also use Telegram channels to share performance updates, context behind moves, and more.

Intraday Alerts: The Trading Analyst has added a new day trading system for members. It focuses on QQQ Index trends with alerts based on 3-minute bars, active from 30 minutes post-market open to 15 minutes pre-close. Given QQQ’s volatility, trade durations may range from 3 to 30 minutes.

They share alerts via their Intraday Alerts Telegram channel — and the team is reportedly working on a system that will fully automate these trades for our members.

In addition to the alerts, you get:

Weekly Trading Report: Every Monday, The Trading Analyst’s senior trader offers a comprehensive recap, setting the tone for the upcoming week. (It has an impressive ~50% open rate).

Watchlist Feature: A daily updated curated list, complete with live commentary.

Weekly Updates on Potential Setups: Weekly insights on potential plays.

Comprehensive Trading Courses & Educational Material: The Trading Analyst offers an impressive array of courses, including options courses for beginners and advanced traders, a “Stock Chart Patterns Cheat Sheet” course, and more.

Moreover, The Trading Analyst offers the best comprehensive trading alert service that we’ve found. Learn more about the service here and other alert service offerings.  

The Best Way to Learn About Day Trading

There’s never been a lower barrier to entry to learning about day trading.

There’s a mindblowing amount about day trading for beginners that can be found via YouTube videos and different ecourses.

Just about everything you need — signing up for a brokerage to executing complex option strategies — has a custom-made video explainer.

When you’re ready to uplevel, these are great educational resources for stock and options traders:

1. Best stock trading course: Investors Underground

As noted earlier, Investors Underground isn’t cheap. But you get what you pay for.

Not only do they have a vast library of ecourses and educational materials, but you’ll also get access to mentors and the platform’s massive active chat room.

(Learn more about Investors Underground and other day trading courses here.)

2. Best options trading course: Bezinga Options

The Behzinga Options course is possibly the single best way to learn about day trading options that we’ve come across at WallStreetZen.

The curriculum stands out for its use of practical, real trades, not theoretical scenarios.

The course delivers a thorough options education from a highly-profitable options trader.

(Want more great options trading courses? Click here.)

Final Word: How to Day Trade

There’s a reason why day trading is so popular. It’s an often-lucrative activity that can range from a part-time hobby to a potentially high-paying full-time career.

While we’ve covered the basics of how to day trade in this article, your day trading education should be an ongoing pursuit. Over time, you’ll adapt and evolve and likely even develop your own strategy.

The resources in this article will help you on your journey so that you can learn the ropes and key strategies and refine your trading approach while you figure out what works best for you.

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