Day Trading for Profit: Is It Possible?
By Space Coast Daily // November 18, 2019
Do people actually make money as day traders? Perhaps you’ve heard rumors and urban legends about this industry. The stories circulate online and in offices all over the country every day.
“Mary made $2 million in six months as a day trader in her spare time,” or, the other side of the tale, “Jim lost $100,000 while trying to become a successful day trader.”
There’s no shortage of myths and misinformation about day trading. That’s because most people don’t take the time to find out what it’s all about. The practice is neither rocket science nor overly simple.
It takes hard work and experience to become a successful day trader. And, yes, people have lost and gained huge sums of money in short time spans, but they are rare exceptions. Here’s the real story about this unique style of buying and selling stocks:
What is Day Trading?
People who do not hold any securities overnight and who typically buy and sell large quantities of shares in order to take advantage of very small price moves are considered day traders.
By definition, these professionals need to have a large amount of capital to make a profit on tiny movements in price. They also need to have the confidence to make large purchases and sales every day of the week.
If you do this as a job, you should be a person who can handle pressure, risk and uncertainty.
How to Get Started as a Day Trader
The short version of day trading for dummies goes like this, which is to learn the trade, get financial backing if you don’t have the money to put up on your own, get a brokerage account that will let you trade online or over the phone, and then start trading.
Remember, that’s the abbreviated way of describing the road to your first day on the job. Most people who take on the challenge spend at least a year learning how to scalp small price changes in short time frames.
Common Pitfalls
By far, the most common trap that new traders fall into is over-confidence. They think they know it all after a week or two, make larger trades than they should, and lose a large portion of their capital.
Note that if your trading account falls below a certain level set by the brokerage firm, typically $25,000, you won’t be able to continue trading.
The second most common pitfall is beginning to trade before you’re properly trained. It’s human nature, perhaps, but far too many prospective day traders jump into the arena after just a month or two of simulated trades.
Most people who have succeeded in the job suggest that newcomers spend at least one full calendar year working on a simulator before they go live.
Pros and Cons
You don’t need to be a brain surgeon to see the key pros and cons of this career.
On the upside, you can earn a lot of money and, if you enjoy the ups and downs of the stock market, then this could be the ideal job.
The negatives include extremely high risk, high pressured work environments and the chance you’ll lose your account balance.
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