Greetings everyone. I'm one of the many people out there dissatisfied with being a 9 to 5 office peon...not that I'd enjoy being a 9 to 5 office manager either. It's just the daily routine of commuting and having to deal with so many people - rather tired of it. I actually spend a lot of my time at the office staring at stock charts and reading financial/economic news. So then it hit me, if I enjoy doing this so much, why not try my hand at being a day trader full-time. I actually first got the idea a couple of years ago from one of my distant cousins who trades for a living, but didn't give it serious consideration until now. Of course, I don't have the illusions of a typical twentysomething bent on making a quick buck. It's risky as hell. I've had to endure some painful losses in my two and a half years of playing the market so far. Even my cousin who got me started lives a relatively modest life, staying at his family home and driving an old Honda. That said, I'm wondering how good you have to be in order to live off day trading alone? I certainly at least have a knack for doing my research, as I spent the time after I graduated from college before I got my full-time job analyzing charts and fundamentals. I think all I'm lacking right now is time and perhaps a little more starting capital. So how did you guys get started? Anything in particular that's a must-read if one wanted to pursue this type of career?
Trust me on the days that you don't make money it is not very fun day trading. You will wish you had the regular paycheck and benefits. Talk to your cousin and see if he can get you up to speed. Take a look at www.stockdaytrading.biz it will give you the basics
No ! Forget trading fulltime till you can earn consistent money part time and even then forget it unless you have 3 years living expenses in the bank.
The amount of money depends on your REAL track record. If for instance you make 1000$ a day trading 2 contracts ES and you never have losing trades during a full year, the risk are low. But unfortunately you will not have such a track record. In reality you will have ups and downs. Especially the downs are important to calculate the amount of money you need to survive. First thing to do is prove in reality that you can make money consistently. Depending on that track record you can decide on which terms you can start trading. Most unexperienced traders think to fast that they are fabulous traders. Start part time and small, and if things go well you will eventually become a rich man. It will taken longer by being prudent, but does it matter if you are only a millionaire after 2 years of trading? The advantage is, that if things go wrong, you won't get hurt to hard, lose little money and be glad that you still have your 9 to 5 job. Many dream about successful trading, but few succeed.
You'll find some good information from this site if you do a search and sift through all the BS - the information is here, it can be a challenge to find however. Off hand, Mschey and Steve_Tvardek are good traders to pay attention to - many others here give good advice as well. From my point of view, the critical aspect of doing this for a living is imposing a structure around your daily activities in the market. This structure should ideally be a portion of your business plan - I tend to believe that rather than focusing on strategy details, i.e. entry and exit criteria, you should focus on yourself as the primary source of all potential problems. The emotional/psychological factors inherent in trading can cause you to overtrade, ignore your risk parameters, have a hopeful/fearful view of the current market (which will cause poorly thought out "swing for the fences" type trades), etc etc... understand that unless you control your emotional state and stay disciplined, especially with respect to risk, you will likely find it difficult to make consistent money. In terms of making consistent money - unless you have ~2 profitable years under your belt, paying your bills from trading will likely not happen right from the start. It simply takes time and patience to develop the skills necessary. If you haven't been doing this full time for at least a year, it will likely take another full year of screen time before you are making enough to live off. I'm sure others will have different time frames, the things I mention come from my personal experiences. This all assumes that you have the proper mindset to trade well in the first place. Some people cannot handle the uncertainty and get frustrated too easily. I've traded partime since 1998 and I went full time in 2004, however, I was lucky enough to have plenty of side income from other projects and some consulting revenue as well during the entire process. I have not had to meet monthly profit goals to put food on the table so to speak. I suspect that type of pressure might harm someone in your position - i.e. the comfort of a paycheck might be too much to surrender, especially after the fact when you've had a difficult day or week. Just some thoughts to consider. I think the best question you should ask yourself is if you are psychologically capable of trading professionally... it might take you a while to figure out what that means exactly, its different for everyone I suspect. Here are a few tips given what you've mentioned: - 25k is plenty. Take 10k of it it to a prop. shop for 10-1 leverage and put 15k in the bank at 5% interest or some kind of "stable investment". - Limit yourself to 3 trades per day max at 100 shares a piece for the first 3 months or so. Don't lose more the $100 in any given day. Stop once you've hit the -100 mark. - Once you clear over $500/month for 3 months straight using the 100 share/trade and -100 per day max loss regiment, go to 200 shares/trade -150 per day max loss and so on for a few months. In reality you can create whatever structure you want (the above is just an example), just make sure it gives you room to make a lot of low-cost mistakes. Let us know how it goes. Consider starting a journal here, that can allow some of the resident pro's to give you some feedback. Regards, Mike
I really appreciate all the replies. I guess I definitely need to more closely measure my success with paper trading. I've been using a simulator at Zacks.com and done very well, but my style there has been more long term. I'll set aside a virtual portfolio for day-trading only and see how well I do. I consider myself exceptionally disciplined and in cases of both heavy losses and great gains, I haven't let my emotions take my eye off the ball. And just to clarify, I meant $25,000 disposable income. I'd definitely have savings aside from that amount in more secure investments. Thanks everyone for your input. I'll be around here learning from you guys the next couple of years or so as I save up starting capital.
Even if I trade with a million dollar I would not be able to guarantee a winning day everyday. I've seen million dollar accounts wiped out. Best to do a swing shift full time job and trade in the morning.
HYE DAS. trading is different to all, their is no one style or approach that works for all, regardless of capital or experience. its a journey of learning the markets & most importantly learning about yourself in controlling emotions & managing risk as a trader. its a mental game, its you against yourself. you must have a written trading plan & stick to your rules to stay in the game. its all about capital preservation, managing risk & keeping your emotions in check, to stay grounded is very important. not to chase the money, is a proper mindset. its a businees & should be traded & respected as one. proper trading capital & reasonable expectations are important, it seems only in trading that most talk about how much we want to make per day. but not many say , when i hit my max loss for the day i will quit for the day. as well if i hit my profit target for the day i will take the day off. its discipline & keeps a trader on track with their goals. its just managing risk & locking in proifits, it needs to be automatic. not many traders probably do it for various reasons, its about making money & having freedom doing other activities. discipline, risk management, common sense , realistic capital and being open minded in learning & growing as a individual. its not how much you make, but how much you save. just my 2 cents.
I wouldn't give up your day job unless you can demonstrate to yourself without a doubt that you can make money overall on a biweekly basis even though you may not make money day to day. Trading is mental grind work, and lot of the times the minimal risk opportunities are fleeting, and you need to be sharp enough to know when they are happening because that win can feed the small losses that you may have.