Trader Insights

How To Start Day Trading in the UK

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So, you’ve decided that you want to start day trading in the UK? Great!

Day trading in the UK can be a lucrative way to make money, but it is important to understand the key steps involved in order to be successful. In this article, we will outline the basics of UK day trading, including tips on what to watch out for and a step-by-step guide on how to start day trading in the UK.

What is Day Trading?

The term day trading typically refers to the practice of buying and selling a security within a single trading day. Although day trading is popular in many markets, it tends to be most prevalent in the foreign exchange (Forex) market and the London stock exchange.

Day trading strategies usually involve high amounts of leverage and short-term trades used to capitalise on minute shifts in highly liquid equities or currencies. Day traders know that they must react quickly to market changes in order to make a profit, so they use technical analysis tools and trading news sources to help them make informed decisions.

Day trading is a high-risk but potentially very high return investment strategy, meaning day traders are usually highly knowledgeable in their field and have a substantial amount of funding behind them.

Why Start a Career in Day Trading?

There are several reasons why people might day trade. Some do it to scalp a quick profit, others do it to hedge their other investments, and others do it as a full-time career.

However, the most common reason to start a career in day trading is that day trading offers an opportunity to make a large amount of money in a short period of time when done right, especially in profitable markets like the foreign exchange.

In fact, there are numerous benefits to a career in day trading, including:

  • High earning potential: Day traders can make a lot of money if they are successful, with many making six-figure incomes.
  • Flexibility: Unlike other full-time careers, day trading gives traders the freedom to work from anywhere in the world. This can be a huge perk for those who want to travel or have a more flexible work schedule.
  • Low capital requirements: Day traders only need a small amount of capital to get started, which makes it a great investment option for those with limited resources.
  • No need to be glued to the screen: Because day traders use technical analysis tools and news sources to make informed decisions, they don’t need to sit in front of their computers all day long. This can be a huge relief for those who want more freedom in their work schedule.

How To Start Day Trading in the UK Step-by-Step

Step 1: Decide which of the financial markets you want to trade

The first step in starting a career in day trading is to decide which market you want to trade. There are many markets to choose from, but the two most popular ones are the Forex market and the stock market. Which market you choose to trade will depend on a few different factors.

Firstly, you should decide which market you have the most experience in. If you have any previous trading experience, then you should trade in the market that you are most comfortable with and feel knowledgeable about. If you don’t have much in the way of previous trading experience, joining an educational, funded trader programme can be a great way to get started.

You may alternatively choose to trade in the market that has the highest potential for profit. The Forex market is often seen as the most profitable market to trade, but this does not mean that other markets are not viable. It is important to do your research before deciding which market to trade in and to consult with experienced day traders to get their advice.

You can also decide based on market liquidity. The Forex market is the most liquid, meaning that it has the most buying and selling activity. This makes it easier to enter and exit trades quickly, which is important in day trading. The stock market is less liquid than the Forex market, so it may be more difficult to enter and exit trades quickly.

Whichever market you choose, you should also make sure that you are comfortable with the level of risk involved and that you have a solid plan to stop you from losing money rapidly in place before starting to trade.

Step 2: Decide when and where you want to trade

The next step is to decide when and where you want to trade. This will depend on a few different factors, such as your lifestyle and work schedule.

If you want a flexible schedule where you can work from anywhere in the world, then you should consider trading remotely. Online trading platforms allow traders to access the markets from anywhere in the world as long as they have an internet connection. Trading remotely offers you more time to focus on your day trading strategy and can be a great option if you want to cut down the number of hours you spend executing trades each day.

If you want to trade during specific times of the day, then you should consider trading in markets that are open at those times. For example, the Forex trading market is open 24 hours a day, five days a week. This means that traders can trade at any time of the day that is convenient for them.

Step 3: Know your trading strategy and skills for success 

In order to be successful at day trading, you need a few key skills. First and foremost, you must be able to make quick decisions under pressure, as the market can change rapidly during the day. Additionally, you must have a firm understanding of technical analysis and how to read charts in order to make informed trading decisions. You should also be comfortable with risk management tools, including stop-loss strategies and money management principles.

It is also important to have a trading plan in place before you start trading. This plan should outline your goals, risk tolerance, strategies and the amount of money you are willing to risk on each trade. Having a written plan can help keep you focused and disciplined while trading, so using a trading journal will help you to track your progress and identify any areas that need improvement.

Step 4: Choose your trading platform

The final step is to choose a trading platform that meets your needs. There are a number of different platforms to choose from, so it is important to do your research before deciding which one is right for you.

Funded trader programmes can be the best way to get started if you are new to trading, as these programmes provide traders with access to a range of resources, including educational materials and experienced day traders who can help guide them through the process and ensure their route to success.

Which platform you choose will depend on a number of factors, including the markets you want to trade, the level of support you need and the features that are important to you.

Step 5: Fund your account 

Once you have opened a trading account with your desired trading platform, you will need to fund it with capital in order to start trading. This money can be used to purchase currencies or other assets. The amount you choose to risk on each trade is up to you, but it is important to remember that greater risks often lead to greater rewards (or losses).

Our funded programmes offer new traders up to a $40K live starting capital, plus an extensive range of educational resources which can be used to get started in the markets. This capital can be used to trade a variety of assets, so traders can find the markets that best suit their trading style and risk tolerance, and learn the strategies they need to succeed. Most retail investor accounts lose money when day trading, so be sure to only use money that you are prepared to lose.

Day Trading Rules & Tax Considerations UK

If you want to start day trading in the UK, there are a few things you need to consider first. For example, what are the tax implications of trading? And what are the rules and regulations you need to adhere to?

UK law requires traders to pay capital gains tax on certain profits they make from trading. This means that you may need to keep track of your trading activity and report any profits to HMRC at the end of the financial year. By working with an existing prop trading firm, you can ensure that you are compliant with all UK tax laws and avoid any penalties.

How To Start Day Trading in the UK: FAQs

What percentage of day traders are successful?

Only around 5% to 20% of day traders consistently make money from day trading, sources report. However, there is no one right answer to this question, as the success of day trading depends largely on individual skill, experience and risk appetite.

Any trader can be successful if they can trade in the zone, utilise expert trading strategies and have the right risk management techniques in place, with day trading being one of the most lucrative but also high-risk investment options for new traders.

Why do most day traders fail?

There are a number of factors that can contribute to the failure of day traders. Some common trading mistakes to avoid include:

  • Not using a trading plan or strategy
  • Not keeping up with trading Twitter and current events
  • Trading with your own capital
  • Trading purely on emotion.

Working with a trading psychologist can help you to avoid these common pitfalls and give you the best chance of success as a day trader. The educational trader programmes at Alphachain offer access to licensed and experienced psychologists who can help you to manage your emotions and trading strategies, and give you the tools you need to succeed in the markets.

Which trading platform is best for beginners in the UK? 

There are many platforms you could choose to trade with as a beginner in the UK. Which platform is right for you will depend on the market you want to trade and your trading experience.

  • eToro: For a classic social trading experience, you can try eToro. This platform offers a wide range of assets to trade and a user-friendly interface. This platform is best for a trader that knows the basics and wants to start trading with their own capital.
  • Alphachain Funded Programmes: For a more comprehensive educational experience, try an Alphachain Funded Trader Programme. These programmes offer access to a wide range of markets, plus expert-led training and support from our team of professionals.

Should I take a trading course before starting to day trade?

Yes! Trading courses can provide you with a comprehensive introduction to the world of day trading and can help you to avoid making costly mistakes that could be potentially risky. Alphachain offers a range of Funded Trader Programmes which offer access to expert training and support, as well as a funded starting capital and key financial instruments. This gives you the best chance to succeed as a day trader.

How do I start investing in Cryptocurrency UK?

In the United Kingdom, you may invest in cryptocurrency by joining a crypto exchange like eToro or Coinbase, or by becoming a Funded Crypto Trader with an online learning platform. When it comes to crypto trading, the markets are open 24/7 so you can trade at any time that is convenient for you, day or night.

Joining a Trading Firm With a Track Record of Success

Whether you’re seeking to break into the finance business, become a Global Funded Trader to find Forex success, or simply develop your trading abilities, our prop firm has a proven strategy for success with our range of trader courses and funded programmes.

Regardless of your trading experience, our Funded Trader Programmes provide you with the essential skills and knowledge required to trade in today’s markets. Our team of experienced professionals provides you with unrivalled support, while our funded trader programmes offer you access to a capital pool that grows along with your success.

If you want to start a career as a day trader, our prop firm is the ideal place to begin. Our team of experts will help you to achieve your financial goals and develop the skills required to trade in any market condition. Contact us today to find out more.

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