| Updated: September 12, 2025Day trading as a business: some tips before getting started
This lesson will cover the following
- Business risk and the risk of personality
- What you need to do before making your first trades
Day trading as a business
We have already differentiated day trading from gambling, but it is useful to mention that if a trader does not strictly follow their strategy and does not pay close attention to how it is performing, their trading becomes sheer gambling. Some may view the changing colours of price movement on the monitor as part of a game. Thus, they may begin entering the market without any consideration of risk and reward. We can say they eventually end up using the financial markets as a ‘global casino’. In doing so, their trading strategies will probably have the same poor odds as those of slot machines in any casino.
If one intends to start day trading as a business activity, they need to consider how best to run the business. They will be faced with two types of risk – business risk and risk of personality.
- Trade Forex
- Trade Crypto
- Trade Stocks
- Regulation: NFA
- Leverage: Day Margin
- Min Deposit: $100
Business risk
The timing of one’s cash flow is what defines business risk. Not every trading month may be successful, but regardless of that a trader will need to pay their bills and taxes. Having cash on hand will be handy during ‘bad months’. If a trader saves a portion of their profits during successful months and forms a cash reserve, no matter what happens to their trading account, this reserve may be used to cover operating expenditures.
Risk of personality
This risk arises when trading turns into an obsession, clouding almost everything else in one’s life. As trading the markets is associated with stress, the major difference between successful and unsuccessful traders has a great deal to do with psychology. For more discussion on the topic of trading psychology, visit our Forex Trading guide.
Some tips before starting to trade
As technology costs have plunged considerably over the past ten years, it has become possible for anyone to start trading from the comfort of their home. At times, of course, one may trade on a laptop when visiting a favourite café or on a terrace with a marvellous view during a stay in a luxury hotel, but more commonly they need to ensure that all preparations for trading at home have been made.
Choosing a broker
First, one needs to open an account with a brokerage firm. If they intend to trade in the stock market, an appropriate choice will be a full-service broker that is a member of the London Stock Exchange, the New York Stock Exchange, NASDAQ, or other major exchanges worldwide. If one follows multiple trading strategies, they usually need different brokerage accounts. For instance, to trade both soft commodity futures (coffee, sugar, cotton) and shares of technology companies, one may require an account with a futures brokerage firm that is a member of the Chicago Board of Trade and another account with a stock brokerage firm that provides fast order execution. For more discussion on the types of Forex brokers and their services, you can visit our Forex Trading guide.
Choosing a trading platform
After opening an account with a brokerage firm, the next step is to choose an appropriate platform through which one can place orders. Trading platforms can be web-based or software-based.
With a web-based platform, one can visit the firm’s website and log in to trade. Thus, orders can be placed from any computer with access to the Internet, wherever you are. These platforms may be designed to operate on particular web browsers.
With a software-based platform, one needs to download and install the broker’s proprietary system on their computer. These platforms provide a richer variety of features and analytical tools; however, orders can be placed only from the computer on which the software has been installed. For more discussion on the topic of trading platforms, you can visit our Forex Trading guide.
What preparations do you need at home?
First, you need a reliable computer. Some traders use at least two – a trading computer and a spare – in case of emergency. Almost all personal computers currently on the market are powerful enough to handle day trading activities. As for the monitor, a 24-inch or larger IPS LED screen would suffice. Some traders prefer two monitors – one for price charts and one for additional information such as news, video streaming, additional price quotes, etc.
Second, day trading requires an Internet connection with as much bandwidth as possible (for instance, at least a 1.8/256 DSL line, or 1,800 kilobits per second data download and 256 kilobits per second data upload). Firewall and antivirus software are also a mandatory investment. Some software products may protect the PC at the expense of a slow data feed, which can become a problem in terms of order execution.
You should also keep additional supplies at hand, such as an extra mouse and keyboard, and spare laptop batteries, in case of emergency. In addition, you should consider buying an uninterruptible power supply (UPS) for your computer so that if the power fails, your trading session will not be ruined. Last but not least, ensure that your computer is backed up on a regular basis. The majority of backup systems can be set up to work automatically, but avoid doing this during trading sessions, because any distraction from trading may turn out to be costly.