How to Day Trade for a Living

by / ⠀Career Advice / December 27, 2022
how to day trade

For the last couple of years, the world of trading had become a very hectic and chaotic place. You can probably take a good guess as to why trading has been fluctuating so much. Covid-19 has made it increasingly difficult to even be in the same place as people. For traders like at the stock market, it makes the job a whole lot harder, but we still need many individuals who know how to day trade for a living.

Day Trading, What Is It?

This leads us to day trading. Perhaps you heard of it, perhaps you haven’t. Regardless, it’s always nice to have a refresher. The definition of day trading refers to the buying and selling of “securities” online, usually on the same day. The point is to do it with short-term price fluctuations. Day trading actually has nothing to invest in the way we think of it. All it does is use the price trends to make money. This can be seen the most in stock markets and at the foreign exchange.

It is a highly competitive job that will be extremely difficult to navigate as a novice. Most day traders themselves are educated, funded, and have the drive to do this all day. Many day traders keep an eye on the news to pay attention to market trends. Also, organized events and announcements also assist in this endeavor when they release topics relating to economics.

Other Strategies for the Day Trader

Day traders use all sorts of tips and tricks to get themselves ahead of the pack. Below are a few ways to make your living as a day trader.

  • High-Frequency Trading (HTF): This strategy uses an advanced algorithm to exploit market inefficiencies that tend to be on the short side.
  • News-Based Trading: For this strategy, they use the news to keep an eye on possible trade options.
  • Range Trading: Range trading requires prices that are already pre-determined in order to figure out what traders plan to do that day.
  • Scalping: Finally, this is strategy is known for creating profit multiple times throughout the day when prices change throughout the work day.

Day Trading and Why It Can Be Controversial

Throughout the halls of Wall Street, there is always talk as to how the economy, the pricing, and the profit will be for the day. Online, there are many trolls and scammers who enjoy luring novices with false promises.

There are many day traders out there who don’t have a lot of knowledge and do it anyway. It could be because of the risk factor involved. Most financier advisors and managers will stay away from day trading. In their own words, they believe that there is simply too much risk for whatever reward you may receive. Also, they have stated that going for active strategies over more passive trading tends to underperform over its duration. Besides, there are also fees and taxes that are involved in this, so you would be making a lot less than anticipated.

While it is a doable career, the risk-to-reward is very tricky as it takes mainly luck and good timing in order for it work.

How Does a Day Trader Start?

Day traders typically are already quite skilled economists who probably have been in this field for many years and had schooling for it. So, if you seek this path, you need to have your A Game.

Day traders in this work field are people who know how the market works. They have an understanding of technical analysis and charts to get a good grasp on market trends. In this line of work, one must have money to make this happen. A smart day trader uses only their risk capital, money only being used for this kind of investment. Using risk capital allows the trader to avoid losing copious amounts of money and emotion is not a deciding factor as well.

Those who make a living from day trading are those who work for banks and large corporations such as hedge funds. These day traders have nearly unlimited resources to help pursue their goals.

What Are the Risks?

For a day trader, every day is a fight. You could make millions or lose everything, in just a span of an hour. If you are someone looking to get into day trading, understand the following risks:

  • Prepare to lose money, a lot of it.
  • It is a full-time job that is long, boring, and very stressful.
  • You can end up in debt quickly due to how much money borrowing you do.
  • You may see claims of how to get rich quickly from this job. Don’t believe them. This requires classes and education to understand.

Conclusion: Is Day Trading Right for You?

If you decide to day trade for a living, it can be a lucrative job. However, it contains controversy, high stress, higher risk, and low reward. It is a world dominated by the largest bankers and capitalists in the world, so if you are a newly, prepared to get steamrolled a lot.

But, if you are still interested, here are a few tips:

  • Have a lot of knowledge of how the market works and how day trading works.
  • Understand that this will take a lot of time, money, and effort in order to get it right. In the first few months, many fail and some don’t even make money.
  • Start small.
  • Keep calm always. Never use emotion when it comes to the trade and try not to stray from your plan.

If you can handle all of this, good luck!

About The Author

Tristan Anderson

Hello! My name is Tristan Anderson and I live in Manhattan, Kansas. I enjoy being in nature and animals. I am also a huge geek who loves Star Wars and has a growing collection.