A common question that we and many other trading experts and organizations are asked is how long before a person actually can consider themselves a true day trader. The answer is one that’s simple: it depends.
This question hinges on a lot of variables, and one is your definition of realistic success. Sometimes it’s scoring 10 times more money than you invested. Other times it’s losing less than you did the month before. This again brings up another list of variables, like the amount of effort you’ve put in.
In general, here are some variables that may affect how long it is before you can be considered a day trader:
- How much you’ve learned.
- How well you’ve absorbed what you’ve learned.
- How much you implement what you’ve learned.
- The amount of money you have prior to trading.
- The sources from which you learn.
- Your threshold for success.
- How much time you put into learning and trading.
- Your choice between day or swing trading.
- How many mistakes you’ve made.
- How much you’ve learned from said mistakes.
This is only a sample of how variables can affect your definition of success and whether or not you consider yourself a day trader.
Counting Your Odds
You’ll also need to consider the odds of success compared to how long you’ve been trading. The reality is that it’s a rare fluke that a first-time trader invests and gains during their first month of learning unless they played it very, very safe. Now experienced trainers have reported that they saw losses for four months, six months or even a year before they had a month in the green.
According to one article, the success rate (based on making money via a consistent income) for men who try short-term day trading is almost 4%. This means about three or four men out of every 100 will be successful at day trading.
This explores another reality – your success may never come unless you work hard and arm yourself with the right tools to become successful.
Another article suggests that in order to become a profitable trader, you’ll need to invest six months to a full year investing in learning and practicing, then trading. You’ll know you’ve found success when you can pull in a decent, salvageable income from your trading.
The takeaway here is that when you do happen to fall into that fluke category of success, you need to realize something – it really is a fluke. As much as trading is about knowing numbers and predicting strategies based on constantly changing data, there is an aspect of luck thrown into the mix.
When you invest time into learning about patterns, investment strategies and the market, you increase your chances of success, but this doesn’t mean that everyone who does exactly what you do will come out with the same result. As a general rule, though, the more time you invest, the more likely you will be to succeed.
Initial Capital Investment
Everyone’s initial capital investment strategy is different, so let’s not talk specifics. Instead, consider this a discussion of percentages. Ask yourself certain questions, like:
- Am I making more than I invest?
- Am I making as much as I need?
- Am I making more than I need based on my goals?
- How many months have I gained instead of lost?
When you consider these questions, you’ll discover whether or not you’re actually successful as a trader.
This wraps us back around to the initial question: how long before I see success and am able to call myself a day trader? The truth is based on your own success and mind. Some people would consider themselves a day trader the second they make their first trade. Others focus on their success as a goal. Either way, it takes time – and how much time greatly depends on you.