The goal of many traders is to learn how to do day trading for a living. The idea of making $100,000 – $200,000+ per year from home is very alluring. Day trading is buying and selling a stock in the same day. You can hold a stock for a couple hours or sell it within minutes or even seconds. Day trading can be a profitable game. On the other hand it can also be a dangerous one if you’re not prepared. Make a well thought out plan then stick to it. There always seems to be an underlying theme when people lose which is not sticking to their plan.
Day Trading for a Living
- Here’s some tips to day trading for a living:
- Best times to day trade: 9 am – 11 am. 3 pm – 4 pm.
- Choose a broker with quick executions.
- Hot keys are important to entering and exiting a trade.
- Liquidity is key.
- Look for stocks with a news catalyst.
- Watch for daily breakouts.
- Watch for HOD breaks.
- Look for reversal patterns.
- Manage your risk.
More Than Basics
It takes more than knowing the basics of trading. In fact, you also need to know news and events that would affect stocks. When you’re learning how to do day trading for a living make a list of stocks. Follow those stocks. Research them and watch them each day.
Keep yourself informed of the happenings with your stock watch list. Watch how news, economic outlook and the Fed’s plans affect the prices of your stock watch list.
Investing.com is a great app to use for news, earnings an economic outlook. Read our post reviewing the investing.com app.
Practice Before You Go Live
When you’re learning how to do day trading for a living practicing in a simulated account is imperative. Practicing in a paper trading account lets you make the mistakes without the pain of losing a lot of money.
You’re learning what you did wrong so you can fix it next time. It teaches you good entries and exits, technical analysis, patterns and so much more. You learn to control your emotions.
Day trading for a living is emotional; especially if it’s your source of income. As a result you want to make sure you’ve perfected your strategy. You should make hundreds of practice trades before you use real money.
Thinkorswim by TD Ameritrade has a great simulated account you can use. We have a great thinkorswim tutorial course that teaches you how to set it up and use it. Read day trading books. Do whatever it takes to be educated. That’s day trading for beginners 101.
When you’ve learned how to do day trading for a living and you’ve practiced, start small. You don’t need a lot of money to trade. Never put your entire account into one trade. Only use money you’re willing to lose. Most successful day traders only risk 1-2% of their account per trade.
Be prepared to lose. Traders fail. Even the most successful traders are only successful 50-60% of the time. Losing is ok. Cut your losses quickly. A lot of new traders will make a losing trade and hold on to it hoping it’ll turn into a winning one eventually.
You can set a stop loss. A stop loss won’t let you stay in a stock that keeps falling. Another thing that’s good to know when you’re making a trade is what kind of order you’ll use. The different types of orders can and will determine profit and loss. It all works hand in hand.
Stay Calm When Day Trading for a Living
Day trading can mess with your emotions. High volume stocks move quickly. In that event never let fear, hope or greed take over. The market will test your nerves. That’s why you make a plan.
When you stick to your plan, you’ll cut any losses quickly. When you’re learning day trading for a living, you’ll see that you have to move fast. You don’t have to think fast because you’re prepared.
You have a day trading strategy. Now be disciplined and follow it. If you plan to day trading for a living sticking to your plan just might be the most important key to success.
Why Do Most Trader Fail?
- Why do most traders fail? The reason is because they trade off of emotions and don’t know candlestick patterns. Candlesticks are the most important trading indicator but it’s also important to realize that patterns still fail, and that’s why it’s important to manage your risk when trading.
Candlesticks and Patterns: Day Trading for a Living
Candlesticks are the name of the game. They provide a ton of insight into the psychology of other traders as well as direction. The stock market is a tug of war between buyers and sellers. As a result, candlesticks are formed.
Day trading for a living is going to require all knowing candlesticks and patterns. Emotions move stocks and markets. This was something a 17th century rice trader by the name of Homma realized. He decided a system was necessary to gauge emotions versus price movement.
As a result, candlesticks were invented. His system is one we still use today. Candlesticks by themselves tell a story. You can tell if traders are feeling bullish, bearish or indecisive on the day. That can affect how you trade.
Group those candlesticks together and you get patterns. Patterns can tell you if a stock is going to reverse or continue in it’s current trend. Patterns do break down so make sure you get confirmation before jumping into a trade.
Both candlesticks and patterns form support and resistance. Support and resistance is the bread and butter 0f day trading for a living and trading in general. Pair that with technical analysis and you can be pretty successful day trading for a living.
Technical Indicators: Day Trading for a Living
Learning how to do day trading for a living is all about technical analysis. You’ve got your plan now let the technicals tell you what to do. Everyone wants some kind of day trading secrets so they can get rich quick. There aren’t any.
Learning technical analysis tells you everything you need to know. For example, moving averages give you entry and exit strategies. The MACD tells you if a stock is bullish or bearish. The RSI tells you if the stock is oversold or overbought.
Charts don’t lie. As a matter of fact you learn everything you need to know by reading the charts. Not to mention what the technicals tell you.
The Bottom Line
It’s important to realize learning how to do day trading for a living takes time, practice and discipline. Many try and fail. However, taking the time to get your strategy in place and practice it gives you a chance to beat those odds. Set a max loss for the day.When you hit it, walk away. Don’t try to make it up. Don’t chase profits. Stick to your plan. In fact, don’t forget to take our day trading course.