Want to know how to day trade for a living? 1. Open a brokerage account with a company like SpeedTrader, LightSpeed or Interactive Brokers. 2. Fund an account. 3. Need at least $25,000 in an account in order to avoid becoming a pattern day trader. 4. Have a good scanner like Trade Ideas that scans for momentum plays. 5 Use your trading account as leverage to scalp $0.10-$0.25 per trade.
Ready to grab the bull by the horns and become a day trader? Heck, if your neighbor, your childhood friend, and your 82 year old grandmother can do it, why can’t you?
Well, they always say you should begin with the end goal in mind. In this case, perhaps your end is a vision of you on a beach with your laptop, making a few trades whilst sipping a cold drink.
But unfortunately, at the moment you’re stuck working 9-5 in a cubicle and the closest thing you have to the beach is your tropical screensaver.
You’re in luck, however, because I’m going to break down how to get to the beach with your drink whilst flipping your boss the one finger salute.
How to Day Trade for a Living
- Choose a broker.
- Buy the right tools (i.e. laptop, mouse, get a good internet connection.
- Begin practice “paper trading” and learning where all the features are of your trading platform.
- Do not go into this blind. Surround yourself with a mastermind group; join a trading community.
- Build your knowledge consistently during your free time. This is a lifelong commitment and you need to be dedicated to it to succeed.
- Develop a systematic approach to your trading. Pick your trading strategy and master the heck out of it. Plan your trade and trade your plan.
- KEEP YOUR JOB UNTIL YOU ARE CONSISENTLY MAKING GOOD TRADES, THEN GOOD MONEY.
Day Trading Falsehoods vs Reality
I think you know by now, get rich quick schemes are just that, schemes. There’s no elevator to success if you want to learn how to day trade for a living. You need to take the stairs.
So the question remains: can you make money as a day trader? Personally, I feel the bigger question is “can you make enough money as a salary to sustain yourself?”.
This isn’t a profession in which you get your paycheck every two weeks without fail. Because nothing is certain in the game of trading. The market decides when you get paid.
From market fluctuations, the cyclical boom and bust, some things, well, most are out of your control. I’d be remiss not to mention commissions, data fees, software fees, taxes, etc. that also need to be accounted for. What’s your personal situation? If you aren’t independently wealthy, its unlikely you’ll won’t have the stress of an income while you’re learning trading. With that in mind we really want you to listen up to what we have to say below.
Begin With the End in Mind
Does learning how to day trade for a living scare you? No need to fret, anything is possible if we break it down into simple, easy to understand steps. So let’s begin with the end in mind and work backward from the beach to now. Because hey, there’s no better way to eat that elephant than one bit at a time.
Here is your first activity: Grab a pen, and a piece of paper, read the questions below and write down all the answers.
- What does success mean to you? Is it a race car, home on the beach, no mortgage, a wife and kids, quiet home in the country, a ski trip with your family?
- How much will this cost you?
Now, write down the answers to the following:
- How much do I need to live each month?
- What are my monthly expenses (mortgage/rent, utilities, credit card debt, loan payments, utilities, food, you get my point…)
- What is the absolute minimum I need to live off of?
- How long can I afford to live without a steady paycheck coming in?
So based on your dreams (where do you want to be – the end goal) vs. where you are now what is the difference? What amount of money do you need to fulfill this goal? Break it down per year, month and day. This folks is the amount you need to make to sustain your desired end goal.
Have a Day Trading System
Setting a goal is always the easy part in learning how to day trade for a living. The real challenge is picking the right steps to achieve your goals. I don’t care how committed you’re to achieving your goals, if you’re blindly running west looking for a sunset, you’ll be disappointed.
That’s why if you want to achieve your goal of day trading for a living, you need to create a system that works. As a result, design a great system or process instead of just a goal. It’s the system that wins. In fact, we refer to this system as your strategy or trading plan.
With a system, you are clear on your strategy. This means having a trigger into the trade instead of just trading the setup.
It means knowing when you will enter and exit the trade. You’re clear on profit targets as well as stop locations and use them. It’s either a setup or it isn’t. Trading is black and white, not shades of grey.
There is no right answer and no one proper method of trading. Especially when learning how to day trade for a living. The method has to fit you, and it may take several tests of different day trading strategies to find one that sticks.
What worked for me was testing around four then I narrowed them down to two: Day After The First Red Day and the Pre-Market Gap and Crap (don’t laugh at the name, it works for me).
Below is a screenshot from one of the strategies I was testing paper trading. It is called the Day After The First Red Day.
What I look for are stocks that have had a big run up over the course of a few days or even weeks if I’m lucky. As you can see in the LGCY* chart below, it ran for about 9 days, going from $6-$10.
As you know, everything that goes up must come down. I then wait for the first red day, where the stock closes lower than it opened.
Typically, what I’ve noticed that with stocks that run up, the day after the first red day, they perform weakly. I plot the previous day’s close price — teal resistance line, additional resistance levels — red lines and I wait for the morning run up/spike to short into the overhead resistance.
*Disclaimer for this chart. I probably wouldn’t have traded this as the volume was really low. I just wanted you to see the Day After First Red Day set up. Read this if you want to learn how to short a stock.
How to Day Trade for a Living With Less Than $1000
Yes, but don’t expect to be a full-time day trader with this account size. However, it’s a good starting point on your journey.
One can always start and grow a small account with options contracts. They allow you to trade the option of a stock like Google, Amazon, or Apple for a fraction of what it would cost to buy an actual share of the stock. This makes day trading stocks more available to the average trader due to the low funding requirements.
The key takeaway here is that unless you are generating mind-blowing returns with a small account balance, you can day trade with a starting account of $1000, but ensure that you are not quitting your day job just yet.
A Few Things on How to Day Trade for a Living
If you’re thinking of day trading stocks, you must have $25,000 in your account to avoid the Pattern Day Trader designation. In a nutshell, it’s the FINRA designation for a stock market trader who executes four or more day trades in five business days using a margin account. This is provided that the number of day trades is more than six percent of the customer’s total trading activity for that same five-day period.
If you don’t have that kind of cash on hand, I recommend checking out swing trading. This is where you don’t settle on the same day. In fact, what’s great about swing trading is that these type of traders don’t fall under the PDT rule.
Considering How to Day Trade for a Living?
Before you take the plunge to start day trading these are some items to consider:
- Make sure you have access to a platform in which you can use a trading simulator
- Have capital you can access after you nail down your strategy in a trading simulator.
- You can afford to lose 1-2% of your account
- Don’t be the impulsive type (i.e. gambler) and follow a trading plan.
- You have chosen your market to trade – Forex, Futures, Stocks or Options
- Able to fight temptation and understand the greatest enemy is you.
- Risk management is something you take seriously.
- You have determined the type of day trading strategy will you use:
- Will it be based on technical indicators?
- Will it be based on news or fundamentals?
If you feel discouraged please remember, “Every expert was once a beginner”. Both trading and day trading for a living is possible if you’re willing to take the time to learn.
There’s no magic bullet for success. You’ve got to embrace the process and enjoy it because you can’t escape the hard work it takes to get better.
Bullish Bears is here to guide you in your journey, our number one focus is you. We are not here to give you the quick tips and tricks, call out the hot trades. No, we want to empower you to make your own informed decisions.
The ability to show up every day even when you are not motivated to learn, create, make something is the most valuable trait you need to be a professional. It doesn’t come easy but it’s a requirement to survive the process of creating or doing something unique and remarkable. If you want to become remarkable, come join us today.