Day trading for a living requires time, effort, a plan and the right personal attributes. Your motivations, trading psychology and ability to make consistent profits whilst minimising losses will give you the best chance of becoming one of the 20% of successful traders out there.
What do you think of when you picture day trading? A busy trade room floor in a big city with suited and booted traders running back and forth celebrating and commiserating fluctuations in the financial markets?
In days-gone-by this was the only way to make a living from day trading but nowadays, there are thousands of people day trading for a living from the comfort of their own homes - and you could join them!
As experienced and trusted online trading educators, the team here at Trade Room Plus helps new online traders learn, understand and execute the best trading strategies based on their goals - including those looking to day trade for a living. We can help you find your trading personality and provide lots of experience and advice to help you get the most from your online trading experience.
Get Started Day Trading For A Living
All you really need to start day trading is a good internet connection, a trading account and a computer meaning it’s easier than ever to enter this adrenaline filled arena - but how does it all work, how can you make a living from day trading, and is it for you?
If you’re intrigued to find out more about day trading for a living, read on for our thoughts and advice on:
- What is day trading
- What securities can I trade
- How to make a living from day trading
- Succeeding as a day trader
- What do you need to start day trading for a living
- The benefits and drawbacks of day trading for a living
- Who should consider day trading for a living?
- When to try day trading for a living
- Building the best trading strategy for day traders
What Is Day Trading?
Day trading, like the name suggests, is all about buying and selling within a single day. No position is held overnight and traders will hold positions over minutes to hours instead. Many day traders use leverage to increase the potential gains from small price movements and typical day trading styles include scalping and swing trading. More on these later.
What Securities Can I Day Trade?
One of the most important decisions any trader needs to make is what securities they will trade. Whether this is penny stocks, currency, CFDs or gold, every trader has their own preference. Each market will vary in volatility and volume which can affect your potential to make profits from trading and will be a big factor in deciding where you want to invest.
Popular Day Trades Include:
- Stocks
- Forex
- Futures
- CFDs
- Commodities
- Gold
- Options
Find out more about trading stocks and shares: How To Make Money In Stocks
How To Make A Living From Day Trading
Before we dive into how to make a living from day trading, we should state that just like every type of online trading out there, there are absolutely no guarantees that you will make money day trading.
If you have been lured into exploring day trading as a way to make a quick buck with promises of super cars or holiday homes in the Bahamas being the norm - this should sound too good to be true - because it is!
The truth is that making a living from day trading requires time, effort, a plan and the right personal attributes.
There is an eye-opening statistic commonly referred to in trading that only 20% of all traders are considered to be successful traders. By that we mean they can consistently make profits and minimise their losses. Don’t let this put you off though because if you possess the right mind set, motivations and tenacity to succeed, then day trading to make a living could offer plenty of benefits.
Succeeding As A Day Trader
Those 20% of successful traders that we mentioned earlier all share key traits of resilience, perseverance & optimism. To succeed as a day trader you need to know what motivates you, have a plan and understand your trading psychology,
- Have a plan
- Know what motivates you
- Understand your trading psychology
Have A Trading Plan
Having a plan and an arsenal of quality trading strategies is key for anyone looking to make a living from day trading. Your plan will help you to consistently make more money than you lose. Rather than focus on making lots of money on trades, consider focusing on reducing the losses you make and this approach will add up to financial gain over time and be far more enjoyable in the long run.
Find out more here: How to build a trading strategy
Trading Psychology
To succeed as a day trader, you need to be able to bounce back from knock backs, keep trying new ways to succeed and learn from your mistakes. If this sounds like too much hard work then we can easily say right now that day trading for a living isn’t going to work for you.
The financial markets are unreliable and frustrating at times so you have to be optimistic that you can overcome the challenges it will present. That optimism will be both hardwired in your personality but can also come from knowing what you’re doing, knowing what motivates you and having a plan.
Motivators
Knowing what motivates you to trade is a key element to becoming a successful day trader. If you’re in it solely to make money, that's fine but you may have more subtle reasons to enter the world of online trading.
Do you want to avoid commuting? Do you want to be your own boss and enjoy flexibility in times you’re ‘working’? Sustainable motivators like these and the desire to learn a new skill or build long term finances is in our experience, far better than wanting to get rich quick!
What Do You Need To Start Day Trading For A Living?
If you have decided that you want to start day trading for a living there are a few things you will need to ensure you’re off to the best start including;
- A good trading set up
- Capital
- Trading education
- Risk management
Trading Setup
Aside from the obvious of a computer and an internet connection, the location you trade is also important. You can make use of a home office or rented office space. We recommend investing in multiple screens for the best trading experience and an excellent internet connection as drops in service could be costly for day traders reliant on quick trades.
Capital
Not too long ago you would have required a hefty wedge of cash to start day trading but with the rise in online trading platforms, market competition means you can now get started with less. As a rule of thumb, you will need at least £1000 of cash that you are prepared to lose in order to get started with day trading but the actual amount of capital you need will vary depending on the markets and instruments you want to trade in so do your homework first.
Trading Education
If you hadn’t guessed by now, trading education is close to our hearts! Before you trade anything, ensure you use a wide range of resources to find out as much as you can about online trading, trading strategies and the markets you want to trade in.
There are plenty of free e-books, blogs, You Tube videos, podcasts out there including our own daily video tutorials. Keep your eye on the stock pages of newspapers, financial broadcasters and trusted financial journalists to ensure you stay on top of what is going on in the world around you and the trading world.
Risk Management
An essential part of every day trader’s strategy is risk management. If you are day trading for a living, you need to ensure you have a system in place that allows you to enter and exit trades whilst retaining enough capital to fund your lifestyle.
A good system will revolve around stop-losses and take-profits and will allow you to plan ahead, stick to your trading strategy and not make rash decisions based on emotional reactions to what the markets are doing around you.
- Stop-loss – This is 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 and minimises the total loss to a prescribed amount.
- 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.
What Are The Pros And Cons Of Day Trading For A Living?
Now you know what day trading is and what it involves, let's take a closer look at the benefits and drawbacks involved in day trading for a living to see if it’s right for you.
5 Benefits Of Day Trading For A Living
- You manage your own time
- Flexibility to work from anywhere
- Easy to set up as a trader
- You are your own boss
- Overheads are low
There are plenty of benefits of day trading. If you like to be in control of your own time, like to work from home and make your own decisions then day trading could be for you. Although you will need a computer and several screens, a trading account, broker and trading strategy, after the initial outlay to fund your set up, the overheads are minimal if you can keep broker fees low by shopping around.
5 Drawbacks Of Day Trading For A Living
- Day traders need enough capital to withstand sudden and, possibly, larger-than-expected losses.
- You will lose money
- Not everyone makes money - in fact only 20% succeed.
- Solitary confinement
- Inconsistent income
It’s unsurprising that most of the potential drawbacks of day trading for a living are money based! There are no guarantees in trading so you must expect to lose money and be comfortable doing so. As most online traders work from home you can find yourself alone for long periods of time - but this may be a blessing if you like your own company and peace and quiet! If regularity of income is critical to your happiness or standard of living then day trading as your only way of earning a living may not be for you.
Who Should Consider Day Trading For A Living?
Anyone can consider day trading as a way to make a living but as we’ve discussed, some people are more suited to it than others. You should understand what ‘making a living’ means to you and whether you are fundamentally suited to the risks and uncertainty that online trading entails.
Making A Living
To ‘make a living’ simply means to be able to cover your expenses. Depending on your lifestyle, penchant for finer things, family commitments or even the country you live in, the amount of money you need to make to cover these living expenses will vary enormously.
With this in mind, to make day trading a viable way to make a living, you can either work to reduce the amount of money you need to live by cutting expenses or work hard using our trading tips above to make more money to cover the expenses you have with day trading.
Trading Personality
Anyone can learn to trade but successful traders must possess certain character traits. For example, can you make logical decisions in line with your long term goals in the face of immense short term pressure? Do you react with your heart rather than your head when faced with big losses? Understanding your trading psychology is so important and will play a big part in the tumultuous world of day trading as every trading error you make is due to poor trading psychology.
By trading psychology we mean, your fear or your greed. These are the reasons that you revenge trade, over-leverage, over-trade, under-trade, move your stop loss and snatch-profit. You have to expect to change and develop your actions as you learn more about trading and if you can’t take a loss, you won’t be able to trade effectively.
Read our 10 ten trading tips for further thoughts on the importance of trading psychology.
Related Questions
When To Try Day Trading For A Living
There is no right or wrong answer when it comes to when you should start day trading for a living as this decision needs to be made with your individual circumstances in mind. If for example you are retired with plenty of disposable cash around that you can afford to lose you will find it easier to dive into day trading for a living than a school leaver looking for their first job.
In our experience though, we have seen that people who become full time traders often start their trading journey to make additional income on top of their usual jobs. Then, as they become more confident and start making money they may reduce their job to part time hours before eventually making day trading their full time income as they hone and craft trading strategies that work for them.
How To Build The Best Trading Strategy For Day Trading?
The best trading strategy will always be the one that aligns with your trading personality, works to meet your trading goals, works for the markets you operate in, and of course, fits around your life.
Every trader is different so a successful and profitable day trading strategy for one trader can be a poor and heavy loss strategy for another trader even if they are trading it on the same market at the same time as there is no one size fits all.
For our tips and advice on creating a brilliant trading strategy that works for you, your goals, available funds, attitude to risk and time available to trade - see our how to build a trading strategy article.
Where Can I Find Out More About Day Trading For A Living?
If you’re looking for more information about day trading for a living, Trade Room Plus is a great place to start! We offer a professional live trade room and trading education platform that can show you how to build a trading strategy in order to day trade in Forex & Index markets on spread bet and CFD broker platforms. For those that learn best by following the lead of others, we also conduct live trades in front of our members and thousands of aspiring traders every single day.
Have a look at our live trade room and our membership options if you want to take courses, see live trading in action and receive our profitable trade signals.
Summary
We hope this article has given you an overview of the key things to consider if you’re interested in day trading for a living. Whether you are brand new to trading and are intrigued by the possibilities of trading full time or have been trading for a while and want to make trading your main source of income, there is plenty to think about.
Day trading for a living is a time-consuming occupation but with the right trading education, practice, strategies and experience in place it can be a rewarding way to make money.
Ensure you know your motivations, trading psychology and have enough capital to sustain your living standards when trading through tough markets.
If you do all of this, you could be on your way to becoming a successful day trader. Just as long as you remember that there are no quick wins in trading and you will lose money along the way.
At Trade Room Plus we have been showing our customers how to trade Forex, Index and Crypto markets on spread bet and CFD broker platforms since 2013 and we offer a comprehensive but accessible way to learn how to trade forex, start day trading, understand when to enter and exit a trade and how to improve your profitability.