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If you are thinking about day trading for a living, there must be a lot of questions in your mind right now. Is it possible to really day trade for a living? If yes, what does it take to make a living from day trading and how do you get started?
Is It Possible To Day Trade For A Living?
The short answer is yes, and there is always a “but”.
It’s possible to day trade for a living, but it’s not going to be easy.
There are many traders who have been able to make a fortune day trading.
Paul Tudor Jones, a billionaire macro-trader and hedge fund manager, made a fortune trading the stock market.
George Soros made $1 billion in a single day trading Forex.
A Japanese day trader known as CIS made $34 million during the 2008 financial crisis and frequently makes millions in just hours day trading.
The list of examples can go on and on.
Yes, all the above-mentioned examples are high profile millionaire day traders.
Not all day traders will be like them, making millions in a very short time.
But, ordinary traders can still make consistent profits day trading the market.
For example, the famous penny stock millionaire trader Timothy Sykes turned $12.415 into $5,237,584 in a few years.
Here’s his trading performance year after year.
For 8 consecutive years, he has been generating impressive returns from day trading penny stocks.
To make a living day trading, consistency is key.
So, what do you need to be consistently profitable in your day trading?
What You Need To Day Trade For A Living
If you want to make a living day trading, here is what it takes to do that.
Criteria #1 You Must Have A Profitable Day Trading Strategy
First and foremost, you must have a profitable day trading strategy.
Regardless of what instrument you are trading ( e.g. large-cap stocks, penny stocks, currencies, etc), you will need a trading strategy that gives you a net positive return.
No trading strategy will give you a 100% win rate.
And that’s okay because you just need your overall wins to more than cover your overall losses.
There are many different types of day trading strategies and below are just some examples:
- Price action
- Trade Triangle (based on Multiple Time Frame Confirmation)
As most day traders rely exclusively on technical analysis to make trading decisions, you must be good at reading price action and chart patterns and also know how to use the trading indicators.
Lastly, a trading strategy only gives you the entry and exit for the trade.
To be a profitable day trader, you not only need to have a profitable trading strategy but also know how to manage your position sizing and trading capital (i.e. risk management and money management).
This brings us to criteria #2.
Criteria #2 You Must Know How To Manage Risk & Capital
So, why is risk management and money management so important?
As we all know that all the profitable trading strategies don’t have a 100% win rate, which means you will inevitably have losing trades.
Without proper risk management and money management, you could end up wiping out your entire trading account even if you have a profitable trading strategy.
If you are day trading on margin, it’s even more important to watch your risk and position sizing carefully because your risk is amplified by the leverage that you are using.
For example, if you take too big a position in a certain stock and the trade goes against you, your trading account will suffer a loss that will take very long to recover from.
Below is the risk-to-ruin table.
Just imagine if your trading account suffers a loss of 50%, you will need to make a 100% return just to recover your loss.
So, it’s important to make a trading plan in advance and take into account of all the possible market scenarios.
What is your position size for the trade?
What’s your maximum risk for the trade?
These are the things that you must have planned even before taking the trade.
Without a proper trading plan, it’s no different from flying blind.
Criteria #3 Master trading psychology
All profitable day traders have one thing in common – the ability to keep their emotions out of trading.
One of the biggest reasons why people lose money trading is that they let emotions take control and affect their trading.
Take me as an example.
When I just started trading, I had the tendency to keep adding to my trading position when the market moves against me.
Instead of doing the right thing which is to accept and cut my losses, I just let my fear of taking a loss take over me.
In the end, I wiped out my first trading account due to emotional trading and also poor risk management.
So, if you want to make money from day trading consistently, you have to take control of your emotions and don’t let it get in the way of your day trading.
Criteria #4 You Must Be Passionate About Trading
As a day trader, you will be staring at your computer screen for hours every day by yourself.
Without a strong passion for trading, you won’t likely last very long, let alone make a living doing it.
So, can you picture yourself trading day in day out alone?
Do you find yourself enjoy talking about trading and the market?
Quick profits might be the reason why you wanted to get into day trading, but it’s your passion for day trading that will keep you motivated to do it in the long term.
How to Day Trade For A Living
So, how do you get started day trading?
Step 1: Set up a demo trading account
If you are just starting out, you should always set up a demo trading account to practice trading and test your trading strategies.
With the demo trading account, you can make all the possible trading mistakes there are to make and learn from them.
So, when you start trading real money, you won’t be making the same mistakes again (hopefully).
When you look for stockbrokers to open a trading account with, you must always find stockbrokers with low or free commissions, a robust trading platform, and great customer support.
Here are the two stockbrokers that I recommend for day trading:
- Interactive Brokers
Step 2: Learn the fundamentals of day trading and profitable day trading strategies
Next, you need to learn from successful day traders about the fundamentals of trading and also proven trading strategies.
There are day trading books or blogs that you can read online, but it is just not as effective as watching training videos of a successful trader trade and explaining his entire thought process.
For example, momentum trader Nathan Michaud, also Investors Underground founder, offers not only day trading courses but also day trading chat rooms and day trading 1-on-1 mentorship.
There are two day trading courses on stocks:
- Textbook Trader
- Tandem Trader
Textbook Trader is more of a textbook style of teaching you how to day trade stocks with a lot of theories, while Tandem Trader is more of showing you real trades and profitable day trading setups with tick-by-tick commentary.
So, which stock trading course is the right one for you?
Both are great in their own way.
If you are just starting, I would recommend you get both because Textbook Trader gives you all the foundational knowledge and Tandem Trader shows you exactly how to trade through real trade examples.
But if you have already been trading, then I would recommend Tandem Trader because you get to learn why they take the trade and how they manage the trade and the entire thought process behind each trade and implement it in your own trading.
Lastly, how much does the stock trading course cost?
Both Textbook Trader and Tandem Trader cost $997 each, but you will enjoy huge savings if you get the trading room subscription + trading course bundle.
And I think it’s really worth it to get the bundle because you get to see how they trade live in the trading room and trade alongside them and implement what you’ve learned in the course.
Most importantly, you can get instant feedback on your trading as well as 1-on-1 mentorship if you have any questions.
Check out Investors Underground & Try Out Free Video Lessons Here
Step 3: Trading software you will need to help you improve your trading performance
As you probably already know that almost all day traders use technical analysis to make trading decisions, it’s important to have good real-time charting tools.
Better yet, what if you can have both advanced charting tool, stock scanning tool, and high-probability trade opportunities generated by Artificial Intelligence?
Wouldn’t that be awesome?
Trade Ideas can help you do exactly that.
Trade Ideas is an artificial intelligence trading software that was founded in 2002 to help traders scan through the market to look for profitable trading opportunities quickly, so you can be the first to act.
It can watch each and every trade of every stock in the markets and notify you about profitable trade opportunities in real-time during market hours based on your pre-defined filtering requirements and also event trigger settings.