Is day trading as a career even feasible?
Modern devices and the internet has made this line of work more accessible. If you have a reliable internet connection, you can start to day trade for a living.
So yes, day trading for a living is a viable career. Some of the benefits include self-employment, meaning you have control over your work hours. You can also trade on a laptop, meaning you can do it anywhere.
However, these benefits don’t necessarily mean day trading is easier or involves less work than a regular day job. Read on because here’s what you need to know about day trading for a living.
What Day Traders Do
Day traders usually trade stocks, commodities, options, futures, and currencies like cryptocurrency. They hold positions for minutes or even hours before they sell again.
They’re called day traders because they enter and exit trades during the day. It’s rare for day traders to hold positions overnight.
Profiting from short-term price movements is a day trader’s goal. They can also use leverage to increase returns, though it can also increase losses.
Like we’ve said, you will be your own boss as a day trader and work the way you want. You’ll be free to set your preferred work hours.
You also won’t spend money on commutes, gas, or parking space. You won’t need a suit either since you can go to work straight out of bed.
However, there are also drawbacks to these benefits. For one, you’ll have an inconsistent salary. You might take $3,000 one day and lose $2,000 on another.
There’s no definite career progression either. Only your takings can make significant improvements. You might also find it hard to return to the business world.
There’s also the challenge of bots, algorithms, and automated systems. They now make up 60% of the market volume and you’ll need to compete with them.
Several factors influence earning potential as well as career longevity. Remember, most people who day trade for a living must be ready to risk their own capital.
One important factor is whether you’re an independent trader or you trade for a bank or hedge fund. Traders working at bigger institutions are usually better capitalized and won’t risk their money. They also have access to information and tools to give them an edge.
Some independent trading firms give day traders access to their platforms and software. However, the traders must risk their money.
Other factors impacting your earning potential include the markets you choose to trade. The amount of capital you’re willing to invest is another factor. Someone with $30,000 will have greater earning potential compared to another trader with $3,000.
The time you devote to trading will matter. Profitable strategies and systems can take years to develop. It means you must have the patience to learn them all.
How to Day Trade for a Living
Day trading for a living is no easy feat, meaning you’ll need to know some things before getting started. Here are some strategies to start a day trade for a living.
If you’re looking into day trading as a career, set up some fundamentals. First, you need the hardware. An internet connection and a mid-range computer will do.
They’re important because hardware or internet crashes can cost you. It’s best to have a two-monitor setup.
You also need a broker. Make sure your broker suits your needs. Find one offering competitive prices while having an easy-to-navigate platform and reliable customer support.
Your strategy must fit your trading style. It will rely on charts, patterns, and technical indicators. For example, consider how KJ Trading Systems does the job.
If you intend to day trade for a living, you need significant capital. People dabbling in investments only need a few hundred dollars to buy a company’s shares. The Financial Industry Regulatory Authority (FINRA) has set rules defining a pattern day trader.
These rules require regular traders to have at least $25,000. It means they can’t trade if their account balance goes below the required amount. To make significant profits, your capital must exceed this minimum amount.
However, the industry’s recent globalization changed how it works. It allowed many platforms to grow outside the United States’ regulation.
Today, you can start day trading with as little as $1,000. However, smaller capital will also have its disadvantages.
You also need significant knowledge in the field. It will increase your chances of success in day trading.
The good news is you have countless free educational tools on the internet. Look up books, PDFs, tutorial videos, blogs, forums, and podcasts.
You can get advice from seasoned traders on blogs, forums, and chatrooms. Books and tutorial videos allow you to have a better grasp of the landscape.
Knowing how to manage risk is crucial if you’re day trading for a living. Your system must ensure you have enough to make moves. At the same time, keep enough capital to keep you afloat.
A reliable system involves stop-losses and take-profits.
Stop-loss refers to the price at which you sell a stock and take the loss. It prevents you from holding positions that might further bleed you.
Meanwhile, take-profit is the price at which you sell and take the profit. It helps you keep a profit by selling before a consolidation period kicks in.
You Can Make a Career Out of Day Trading For a Living
Day trading for a living is a viable career. However, its benefits will come with drawbacks and risks. Alongside the freedom of self-employment is a fluctuating salary.
Do you want to know how to day trade for a living in 2021? You need a basic setup of hardware and strategy alongside significant capital. However, devoting time and intellect to day trading can help you succeed.
Want to know more tips on day trading? Check out our other guides here!