The people that succeed wildly at day trading for a living are almost like professional athletes in the sense that they have a dream job that pays extremely well, and it's something that most "normal people" can't do.
One of the questions we see on a regular basis is “can you make a living trading stocks?” The interest is not shocking because the idea that you could quit your 9-to-5, roll out of bed and earn hundreds, even thousands of dollars per day just by day trading stocks is fascinating to most people.
The truth is, yes, it's possible to make a living day trading stocks. But it's not probable for those who don't have an elite understanding and training in the field. Let's discuss the ups and downs of day trading and you can assess if you're ready to enter this arena and succeed.
Day Trading Is Not For Everybody
Day trading for a living has extreme highs and serious lows. Some people seem to be made for the lifestyle, some are forced out quickly. We'll start out with the bright-side of day trading and what makes it a dream job for many.
Positives of Day Trading For a Living:
• Freedom & Independence - Many full-time day traders are self-employed, working for themselves and have to answer to no one. They are true entrepreneurs living by their wits and, reaping the financial benefits of their own decisions. There are people literally sitting on tropical beaches, or in a mansion high up in the hills, armed with only a laptop and an internet connection, who make more money than most normal folks could ever dream of. If you are one of the few who can master this art, it will reward you in a way that no other job or career can.
• Status - Day traders have an almost mythical status among the throngs of rank-and-file workers that exist, very similar to the legendary “fast guns” of the old Wild West – they're like iconic outsiders that live by their own rules and make their own way in life.
• It's Exciting -Making winning trades gives day traders a rush that few people feel in their work. Successful day traders say that there are few things, which can compare in this life to making a home run trade. BUT, this may be related to one of the negatives below, the addiction risk involved.
Negatives of Day Trading For a Living:
• Losing Money - The average day trader loses money, over 80% of day traders lose money. Here is a study from Yale University with a great sample set of data and some hard facts. The overwhelming findings of the study is that after you factor in commissions, the majority of active day traders only break-even.
• Stress - Day trading for a living is extremely stressful for many, it's a job that requires a very specific psychological skill set and risk tolerance that most people simply don’t have. Psychologically, you need to steel yourself for the income inconsistency that will surely accompany the first few months of your trading.
• High Entry Cost - Day trading stocks from home is one of the most capital-intensive arenas of stock investing. There are strict cash requirement minimums under U.S. Law to day trade, the minimum equity requirement for a trader who is designated as a pattern day trader is $25,000, this amount must be maintained at all times. This dollar figure just allows you to get into the game based on the laws as stated by the Securities Exchange Commission, if the trader's account falls below this minimum, he or she will not be permitted to day trade until minimum equity level is restored either by depositing cash or securities.
• An Addiction Risk - For some personality types their is a huge psychological addiction risk. According to Ed Looney, executive director of the Council on Compulsive Gambling of New Jersey, day trading is “like crack cocaine – it’s much more addicting than other kinds of gambling.” Some psychologists suggest that gamblers and day traders are similar in that they tend to be competitive and of above-average intelligence.
Definition of Day Trading for Beginners
For those that have very little knowledge of day trading, we'll quickly give a definition of day trading for beginners who are just now hearing about this unique job field.
By definition, day trading is the regular practice of buying and selling one or more security positions within a single trading day.
A major day trading rule is that no position, long or short, is held overnight.
Day traders routinely deal in thousands of shares, often with leverage, and look for small-percentage profits on each trade – often less than $1 or $2 per share. Day traders take positions based upon their analysis of a stock’s probable price direction within the trading period.
Popular day trading strategies include the following methods:
Scalping - Many day traders sell as soon as a trade becomes profitable, after covering their interest costs, commissions, and overhead. This day trading strategy is effective as long as the majority of small trades are in fact profitable and the day trader is equally quick to cut losses.
Daily Pivots - Anticipating that many stocks trade in a daily range, day traders may buy at the low price (a “support” level) and sell at the high price (a “resistance” level) or, conversely, short sell the stock at resistance and buy back the position at support.
Fading - Many day traders short sell stocks with rapid upward movement, anticipating that other investors may take a long position. The combination of short-sellers and those taking a profit creates an imbalance between buys and sells, driving the stock downward.
Momentum - Traders buy a stock if it is moving upward with increasing volume. They sell when the price is trending downward with volume, assuming that the price direction continues after they take a long or short position, so they can close the transaction with a profit.
Advantages of Having a Stock Market Mentor - Day Trading Rules
The elite-level day traders are commonly under the tutelage of a stock market mentor.
Well, because successfully day trading for a living means reaching a level of excellence that most people will never achieve, no matter what career they choose.
It’s the difference between playing in a pick-up basketball game in the park and being an NBA-caliber player. Between being an extra in a movie and being an Oscar-winning actor, between being a weekend musician and a true rock star. And when you think about the elites in these example professions, the best of the best usually have the same thing in common, they have or had coaching.
For that reason when day trading millionaire stock market mentors make their time available, serious day traders take advantage and seek this tactical stock market advice so that they can make day trading for a living a reality.
Hiring a stock market mentor is also a cost you need to factor in before jumping into day trading. If you can't afford coaching, you better know someone that is successful at day trading stocks and willing to spend countless weeks teaching you for free. Jumping into day trading for a living while not 100% educated on what your day trading strategies and tactics will be is a recipe for sure failure.
Day Trading Rule - Understand Psychology of the Stock Market
Don't think for a second that general stock market advice will serve you well when day trading for a living is the goal. Day traders don't look for the same things in a stock that Warren Buffet would look for and will need a day trading specialist, not a basic investment advisor.
Day trading rules are completely different, traders are not concerned with the fundamental value of the companies whose securities they trade. When a holding period is measured in minutes, fundamentals have little impact on price. Day traders are intensely concerned with the psychology of the market, this is one of the main lessons taught by day trading millionaires – what's most important are the hopes and fears of individual shareholders as they buy and sell.
Day traders focus on very specific indicators that predict and even dictate those feelings, rather than factors like price-to-earnings ratios, competition or market share.
Rumors, rather than facts, drive stockholder's emotions, unless news is unexpected. Even then, however, day traders often doubt whether any news can be truly secure, believing that “insiders” may begin to take action before truly consequential news is released. In short, the act of yelling “fire” is more relevant to a day trader than an actual fire.
Using computers and software, day traders make decisions based upon technical analysis, the mastery of which requires hours of study and familiarity with historical individual stock price movements.
Elite-Level Day Trading Training Covers Various Markets
Day traders operate in a variety of different markets – stocks, commodities, options, and currencies – since the main criteria for day trade investments is volatility of price, not value. Although cash capital requirements vary for each market, these same principle day trading rules apply to all areas:
- Initiating trade transactions based upon very specific technical analysis
- Opening and closing positions each day, holding no securities overnight
- Buying and/or short selling as required to take advantage of projected price movement
Day Trading Books & Proven Day Trading Training Resources
To be successful at day trading for a living you need to understand day trading rules and have extremely sound trading methodology, methodology that takes advantage of market volatility, yet always keeps risk management as its core principle.
Ideally, the day trading strategies you use should have been tested over time, in all difference market environments, and with real money.
You definitely need to spend some serious time studying day trading rules and educating yourself about everything related to trading, many day trading rules are so rarely shared in public that they are basically considered day trading secrets. It's important to emphasize this again so that you are clear on this, when day trading for a living you are a trader, not an investor.
To help you understand the mentality and tactics of a day trader many novices turn to the highly-rated day trading book called "Trading for a Living: Psychology, Trading Tactics, Money Management", it's regarded as one of the best books at explaining basic day trading rules.
Here's a short list of other highly regarded day trading books...
- A Beginner's Guide to Day Trading Online (2nd edition) - An excellent day trading for beginners book.
- How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline & Trading Psychology
- Mastering the Trade, 2nd Edition: Proven Techniques for Profiting from Intraday & Swing Trading Setups
- Day Trading for Dummies - If you ONLY want a general introduction to and overview of day trading then "Day Trading for Dummies" will fill your needs. If you have actual plans on day trading for a living this book barely scratches the surface.
If you are a beginner, it would be wise to put in the study hours necessary to give yourself a strong understanding of the day trading world you are about to enter.
More Day Trading Rule Resources
If you currently have "skin in the game" and struggling at day trading for a living. You've probably already read these books and need advanced day trading training.
If so, you may be looking for a day trading mentor like Timothy Sykes.
Timothy Sykes is one of the most fascinating day trading success stories to date, he himself is a self-made day trading millionaire that teaches the ins and outs of penny stocks and his students have now made over $16 million!
His day trading training is not cheap, but, the most valuable stock market mentors never are.
Students of his converge on day trading chat rooms under the watch of Mr.Sykes and are able to follow his specific day trading advice and are also able given alerts about the stock trades that he himself will be making.
If you want to learn more about the day trading millionaire and even about the day trading success stories his student have, you can investigate him and his various levels of day trading training on his website.
Timothy Syke's day trading training offers...
- A 4,400+ Video Lesson Library.
- His own Realtime Trade Alerts in SMS, Email & Push Notification format.
- Daily 5-10 Stock Watchlist.
- Daily Day Trading Chatroom Access.
- Weekly Video Lessons.
Final Words on Day Trading For a Living
While the possibility of becoming extremely wealthy in a short time is what attracts people to day trading for a living, the unfortunate fact is that failure and financial loss are the more likely outcome for those that have not developed or copied elite day trading strategies and methodology.
According to millionaire day trader and author James Altucher, who has traded up to $40 to $50 million per day at his peak, “It’s the worst job in the world on a bad day. I would make a trade, it would go against me, and then I wanted my heart to stop so my blood would stop thumping so loudly. Day trading pulls everything out of you.” Altucher goes on to say, “Only around 5% of retail traders make money as full-time day traders. The probability of success is slim.”
So if you are insistent on day trading for a living, focus on educating yourself to the highest degree or risk losing money and losing it fast. Only an elite few become noteworthy day trading success stories.