Last time, I talked about my goal to day trade for a living; now let’s talk about what might really be required of someone who is day trading for a living.

First of all you need capital.  You can paper trade all day, but unless you’ve actually got money invested in the market, you can’t very well make a living at it can you?  If you’re day trading for a living, you’re going to be buying and selling stocks all day, and this is going to require quite a bit of capital.  If you’re day trading full-time you’re going to be classified as a pattern day trader and the SEC has imposed a rule that requires you to have at least $25,000 in capital.  In reality you’re going to need a bit more than that because if you fall below that level, your account will be frozen.  There are a vast range of opinions on the minimum amount required to succeed as full time day trader.  They start as low as $30,000 and go on up half a million dollars.  Before I go full time, I’d like to have at least 50k, but I have a few years studying and playing the markets part-time with moderate success.  That success only came after some big failures though, and believe me, as a new full time day trader, you’re going lose money trading.  You have to be prepared for that.  Which brings me to my next point.

If you plan on day trading for a living, you’re going to have to get used to losing money.  There are ways you can mitigate the damage though, especially when you’re just starting out.  If you’re new to the markets, it’s easy to get caught up in the speed and potential to make a lot of money day trading, but you have to try to suppress that and start slowly.  You should being trading with just 1 stock.  That’s right, 1 stock.  Not 1 company’s stock; 1 single stock in a position.  If your broker doesn’t allow this, maybe bump this to 10.  If your broker doesn’t allow you to trade 10 stocks, get a new broker.  This method let you ease into the reality of day trading for a living using real money that a day trading simulation will never replicate.  This may seem costly at first, due to brokerage fees for each trade, but it’s a lot less costly than starting out with a larger position size, and losing every trade before you figure out what the hell’s going on.  Day trading for a living is a great way to make money, but you have to walk before you run.  And before you walk you need to crawl around trading 1 stock.

When you’re day trading for a living you have to have patience.  You have to have an eye for the big picture.  Yes, you’re trading 1 stock now, and probably losing money whether the trade is good or bad.  But when you start increasing your wins in both quality and quantity you can increase your size and the money will follow.  If you can hold onto a stock for a full point of movement, imagine if you held position of 100 or 1000 on that same trade.  You just made 1000 bucks day trading.  Congratulations. Conversely, you need to understand that losses happen.  You can have a down day or even a down week, but you have to give yourself and the market the chance to turn things around.  You can make up for a bad week in one trade.  I’ve seen it happen; I’ve made it happen.  The trick, when you’re day trading for a living, is having the patience to stick with it through the bad times as well as the good.  Try to not let the pressure of providing income affect your solid judgement.

Day trading for a living can be one of the most stressful ways to earn income.  Using the simple tips above can help your learning process and ease you into the reality of becoming a full time day trader.

Related posts:

1. Day Trading For a Living
2. Day Trading With Break Even Mentality
3. On Learning How to Trade Stocks – A First Lesson

My ultimate goal is to be day trading for a living.  Some of you are aware that I am not a full-time trader, but I trade pretty regularly, and I do research almost daily whether or not I trade.  I used to even engage in the social aspects of trading, like chat rooms, forums, and Stocktwits, but I stopped all of that social stuff to focus on things that would allow me to focus on that ultimate goal of day trading for a living.

Late last year, a series of occurrences in my life caused me to revaluate what I was doing and where I was going.  It was at this point that I decided to prioritize my goal of day trading for a living above just about everything else.  I then had to evaluate what I was doing to get there and eliminate those things that were merely taking up time, or even holding me back.  It was at this point that I stopped writing here.  Writing about day trading here wasn’t helping me get to that goal, really.  I didn’t want to use it as some sort of online trading journal (I find it easier to keep that in old school pen & paper form for some reason), I was simply using it as a place to vent, screw around with charts, and try to show a couple day trading strategies I use.  I wasn’t really gaining as much I was a putting into it, so if I planned to start day trading for a living any time soon, it had to go.  Along those lines, I also withdrew from the trading social scene.  Though I met a lot of cool people through places like Stocktwits and forums, it wasn’t really allowing me to focus on becoming a full-time trader.

When I start day trading for a living, I don’t want to be out of practice with the skills that’ll be required of me.  This is why I still wake up early, screen stocks as if I were going to trade, and spend much of my morning watching the stock market, if not trading.  And though the morning is my bread-and-butter time, I tend to continue to watch the market throughout the day.  I’ll generally watch the stock market from open to close, including after-hours, and then I’ll analyze charts for a couple hours.  I do this because I feel that while these activities don’t quite propel me towards my goal of being a full-time trader, they will be invaluable when I get there.  In my next post I will talk about what I actually feel is required of someone who is day trading for a living.

Related posts:

1. What Does It Take To Day Trade for A Living?
2. Day Trading Schedule
3. Day Trading With Break Even Mentality