The Reality of Day Trading for a Living

Day trading has a certain image, fostered by some movies and by many courses and seminars. The reality is, as you have probably guessed, somewhat different from what you may have heard. Day trading does not suit everyone, and you must realize what is involved before deciding that trading every day is where your future lies.

First, to be clear what we are talking about, day trading is trading online while the markets are open, profiting from what are usually quite small price movements, and not leaving any trading positions open overnight. To make much money out of small price movements, you need to be using a reasonable size account, so it is not viable for the trader who has just a few thousand dollars to play with, unless he is just playing. In fact, if your broker-dealer classifies you as a "pattern day trader" the Securities and Exchange Commission requires you to have $25,000, and this doesn't allow any leeway for the inevitable losses and drawdown.

Secondly, you need to have the right emotional outlook in order to be able to sustain the practice of day trading. Trading is mentally demanding, and day trading escalates the normal challenge by requiring constant focus and concentration. It is essential that you are prepared each day, and not suffering from a hangover, for instance.

When you are trading you need to be able to make fast decisions, otherwise opportunities will pass you by, or worse still you will take larger losses than you need to. If this is not natural for you, then you must either work hard to cultivate it, or find some other form of trading or work to make an income. The markets take no prisoners, and the majority of people who start trading give up within a short time.

If you trade from home, as many are doing, then you need an understanding spouse and a separate space away from distractions. Some people like to think that they can trade for just one hour each day and make a fulltime income, but the fact is that this requires a great deal of hard-won experience, and even then the markets may not go along with your schedule and give opportunities in the hour that you have free.

Some markets are better traded, or perhaps more predictable, at certain times of day, and you may need to accommodate this into your timetable to have a better success rate. It is also futile to say that "I will earn X amount each day", as you will have some days when nothing goes right and you are better off quitting and starting fresh the next day.

Nonetheless, there is a thrill when day trading that is unlike any other, and those who make a success of it get hooked on the experience. It is exhausting, and hard work, but if this type of life appeals to you then you owe it to yourself to give it a try.

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