If you’re trying to learn how to become a day trader, you may become a bit overwhelmed with all of the information and opinions you’re going to come across. There are many paths to becoming a day trader. Which ever one you choose will depend on your personality, your background and education, and your financial means.
Day trading firms are often looking to add new day traders to their roster. Their pay structure will vary from firm to firm. They will (or should) offer a training period where they really teach you the ropes of day trading. This training period will consist of long hours of research, trading, and team meetings wherein you will hone your specific trading style and find the setups that work best for you. You will start with simulated training, and work your way into trading the firm’s capital. You will split your profits with the firm; the ratio of the split depends on the firm. The type of people they are looking for are not only going to have to be very smart, but they are going to have to have a personality that is compatible with day trading. It really doesn’t matter if you’re the smartest kid in the finance department at Harvard, if you aren’t resilient enough to handle the daily beatings the market is going to hand you for the first few months as a new trader, you are simply not going to make it. This is the route best taken for those who want to be a professional day trader, as they will usually (but not always) require their traders to trade in-house.
If you have developed an interest in day trading, but don’t have the education or experience to back up that interest, you might want to look into paying a reputable firm for training. Day trading firms will sometimes offer the same training they offer their hires. Unlike their hires though, you’re gong to have to pay for it. The training should last several weeks, at least. It doesn’t matter how good a trader claims to be, he can’t teach you to day trade in a 3 day seminar. This kind of quality in-house education is invaluable, and the price may seem high at first glance (often in the 5-10k range), you will lose much more than this should you decide to go it alone without any sort of training. It also makes for a great opportunity to show that you have what it takes to become a professional day trader, and you’ll be able to make some solid networking contacts. You never know, you might get offered a spot at their trading desk if you really stand out, and they have a spot for you. If you can’t make it to their location, these firms also often offer an online version of this training. Beware of firms that require you to invest your own capital (usually 5, or 10k), allow you to only trade your own money, and offer you no training. This type of firm is not interested in investing their time and money into helping you become a day trader.
So how do you become a day trader without the help of a trading firm? Well, it’s possible, but the road is going to be long, difficult and expensive. This is where having quite a bit of start-up capital is going to help, and you should plan on losing every penny of it. While it’s unlikely that you will end up losing every penny, you have to be fully aware of the possibility, and prepared for that outcome. Honestly though, you’re going to lose more than you would if you aligned yourself with a professional firm using their training and resources. This isn’t to say you can’t make it on your own, you certainly can, but the learning curve is steeper, the losses deeper, and many just won’t survive the psychological beat-down their going to take without the help of a trainer or mentor. Day trading for beginners is not really recommended without a solid educational foundation as well as a sizable start-up account.
As we said above, there are many different routes to becoming a day trader. Self-educated retail traders can make it, if they are well capitalized, patient, and excessively resilient. Acquiring professional training, though, will make things easier, more clear, build a more solid foundation, and help you make contacts if you want to become a professional trader. Ultimately, the choice on how to become a day trader is up to you, but it is not easy either way.