Day Trading For A Living
Advancements in technology have ensured anyone with a working internet connection can start day trading for a living. But whilst it might be possible, how easy is it and how on earth do you go about doing it? This page will look at the benefits of day trading for a living, what and where people are trading, plus offer you some invaluable tips.
Is Day Trading For A Living Possible?
The first thing to note is yes, making a living on day trading is a perfectly viable career, but it’s not necessarily easier or less work than a regular daytime job.
The benefits are rather that you are your own boss, and can plan your work hours any way you want. Trading on a laptop also means you can do it anywhere, anytime.
Beware – there are many out there who claim to make a fortune on day trading, but usually these people are trying to sell you something. Don’t believe the hype or that there is such a thing as “easy money”.
There are ways to make it easier though – for example, you don’t need to make as much if you live in (or move to) a low-cost, low-tax country. Cutting down on living costs can also make a big difference, as “making a living” on something in essence means that income covers expenses.
Benefits vs Drawbacks
Despite the difficulty, there are some obvious benefits to day trading for a living. To name just a few:
- No boss – You’re your own boss. No more pandering to the needs of demanding and unreasonable bosses. You can work precisely the way you want.
- Hours – You set your own working hours. In today’s world there is always a market open. So, you can choose when you want to work and for how long, fitting it around other commitments. If you want a four week holiday, there’s no HR department to navigate first.
- Overheads – No more expensive train ticket to get to work. No more petrol and parking costs. No more pricey suits. You simply need a computer, an internet connection and some capital to get going.
- Comfort – Whilst everyone else is ironing their shirt for the day ahead, you can slip into some comfy clothes and begin your 15-foot commute to your desk, with a fresh cup of coffee. No more stuffy office or distracting colleagues to deal with. You work from the comfort of your own home.
Despite the obvious allures, comments about day trading for a living also highlight some downsides. The most prevalent of which are:
- Solitary lifestyle – Your colleagues may have driven you up the wall at times, but sometimes it’s reassuring to have people around. Day trading for a living can get lonely. If you don’t like being on your own, think twice.
- Inconsistent salary – Your salary will fluctuate hugely. You might make $3,000 one day and then lose $2,500 the next. You probably won’t have a stable salary to rely on. On top of that, if you take the day off work you, you won’t get paid a penny.
- Career progression – The only thing that can improve is your takings. You may also find it challenging to get back into the business world. Some day trading for a living forums have suggested you’ll be less employable by the end.
- The battle against bots – Algorithms, automated systems, and bots are all taking over the market. They are now responsible for a massive 60% of all market volume. Whilst, there will always be a place for humans in the market, you’ll need to find new ways to adapt and evolve if you want to maintain an edge.
What Are People Day Trading?
One of the most important decisions you’ll make is what to start day trading for a living. What are the popular securities and markets then, amongst those who day trade for a living?
Whether you’re day trading penny stocks for a living or currencies, the volatility and volume in your chosen market will seriously impact your potential profits. The cryptocurrency market, for example, is highly volatile, enabling some to make a very good living.
Whereas, day trading stocks for a living may be more challenging. It is already a saturated market. In addition, a relatively high amount of initial capital is required and losses could be more financially devastating.
Again, day trading commodities or futures for a living will present its own challenges. All of which points to the need for effective
Whether you make it day trading as a living will also depend on where you live, and the market you opt for. Day trading for a living in India, Indonesia or South Africa, not only offers volatile markets, but you also have a very low cost of living, making a living a more feasible.
Day trading for a living in the UK, US, Canada, or Singapore still offers plenty of opportunities, but you have an abundance of competition to contend with, plus high costs of living. You won’t be short of volatility or volume, but you need to sit down and calculate how much you will need to make on average each week or month, to actually live.
How To Make A Living
Making a living day trading is no easy feat. You’ll have a number of potentially expensive obstacles to overcome. Below the top tips have been collated, to help keep you firmly in the black.
The question on many aspiring traders lips is, how to start day trading for a living? The answer is you need just a few fundamentals. Get those fundamentals right and you’ll be in the strongest position to make a generous salary.
- Hardware – You need at least a mid-range computer and internet connection. Any hardware or internet crashes could cost you dearly. Many suggest having two monitors up and running, just in case of emergencies.
- Broker – Make sure you pick a broker that suits your needs. They need to offer competitive prices, reliable customer support, and an easy to navigate platform.
- Strategy – You need a strategy that suits your trading style. It needs to rely on charts, patterns, and technical indicators. It needs to enable you to make frequent profits on high volume, low-value trades.
Location is an important topic. Will you have an office at home or try and trade in a variety of locations on a laptop? You may have seen the images of a lone trader sat behind 6 or even 9 monitors keeping track of all sorts of data – but is it necessary? One alternative to trying to dedicate some space at home to trading, is to use rented desk space.
There is also a service that takes things a step further. ETrading HQ offer leased desk and office space, but also day trading data and collaboration. Like minded traders can exchange ideas and strategies face to face. The concept is booming in both London and New York and may make day trading for a living much more viable for those concerned about markets data, solitude and office space.
One of the first questions out of aspiring traders lips, is ‘how much capital do you need?’ The one requirement of day trading from home for a living is capital. Roll back the dice a few years and you needed a minimum of $25,000 to start day trading in the US. Not only that, but you always had to maintain at least that amount in your account.
These tough regulations meant the for the majority of people, trading for a living was simply not financially feasible. However, globalisation of the financial industry has allowed numerous platforms to develop outside of US regulation. Today then you can start with as little as a $1,000 in your account.
How much capital you will need will depend on what it is you want to start trading.
If you want the best chances of succeeding at day trading for a living you need to utilise a wide range of resources. Fortunately, you can now find free, educational tools with just a few clicks of the mouse. Some of the most effective resources worth considering are:
- Books – see our list of good reads, including easily accessible Google books.
- Ebooks – e.g. ‘new trading for a living ebook’, by Alexander Elder (hassle-free download)
- Tutorial videos
- Forums – ideal for those looking to start making a living day trading stocks, futures, forex, and cryptocurrencies.
- Study guides
- Podcasts & MP3s
You’ll find advice from experienced traders on forums, blogs, and chatrooms. You’ll benefit from detailed strategy examples from books, PDFs and tutorial videos. A lot of the day trading for a living ebooks, epubs, and PDFs are available for free downloads too and can be accessed via Kindle.
If you’re looking for specific guidance on how to make a living day trading forex, consider the forex page. Alternatively, see the stocks page if you’re interested in trading stocks from home for a living.
If you’re looking at how to do day trading for a living, one of the essential components is how you manage risk. As Larry Hite rightly asserted, “Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don’t take a hard look at risk, it will take you.”
You need a system that ensures you have enough to make moves, whilst retaining enough capital that you don’t have to go back to the day job.
A good system revolves around stop-losses and take-profits. These allow you to plan ahead and prevent heightened emotions taking control of decisions.
- Stop-loss – This is simply the price at which you will sell a stock and take the loss. It will eradicate you holding on in hope that ‘it will come back.
- Take-profit – This is the point at which you will sell a stock and take the profit. This will help you retain that profit, by enabling you to sell before a period of consolidation kicks in.
If you’re trading for a living, consistent and stable profits are the goal, which will require a consistently disciplined mind. As Victor Sperandeo highlighted, “The key to success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading.”
It may sound straightforward now, but when you’ve got $2,500 on the line and you’ve been staring intently and tensely at the screen for the last six hours, well keeping fear at bay isn’t so easy. An effective way to limit your emotional liability is to employ as much technical help as possible.
Keeping your emotions in check will take practice, a lot of mistakes and then even more mistakes. However, a neat trick that helps many traders is to focus on the trade, not the money. Take it from experienced trader Alexander Elder, “The goal of a successful trader is to make the best trades. Money is secondary.”
The number of people day trading for a living since 2014 has surged. Is it realistic though? The answer is, it depends entirely on your ambition and commitment. It won’t be an easy ride. But, if it suits your working style, you choose the right market and you utilise the tips mentioned, then you could be one of the few that triumph.