What Does It Take To Become a Day Trader?


Day trading is not for everyone. Day trading attracts people because it presents the potential for a considerable amount of profits. For those who choose to go into day trading, they are lured in not just by the promise of financial success but by the thrill as often described by experienced traders.

Mastering day trading is going to take a considerable amount of time and patience. Expect there to be plenty of emotional and financial pain.

Not surprisingly, a lot of beginner day traders quit in their first year due to stress, wiped accounts, or are unsatisfied by the small profits they had envisioned would be much bigger. Trading requires a lot of experience and most importantly, patience before you can expect consistent profits and begin to rely on day trading as your reliable single source of income. This is why you should start with money that that had set aside and don’t rely on to live day to day.

Because it is going to take time before you can rely solely on your profits from day trading, many traders have decided to day trade as a means to make a side income. Here are the advantages of day trading:

Being your own boss

Day trading is essentially like owning a small business. You would need to acquire your own equipment and set up your own accounts. Everything depends on you, from all the possible gains and losses and calling call the shots during the trading sessions.

Zero Overnight Risk

This means less stress because day traders don’t hold stocks overnight. Day traders close all of their positions at the of the end of each trading day to avoid the risk of price gaps which are the difference between the previous day’s close and the next day’s open price. Day traders don’t lose sleep because once the market is closed, there’s no need to worry about what could transpire between now and tomorrow. All you can do is wake up the next morning and do it all over again.

Increased leverage

Imagine having four times your equity as intraday buying power. If used wisely, expect a great margin to increase your margins. However, this increased leverage is the reason day trading can get risky particularly if the trader has poor discipline and money management.

Cheaper commission

The commission structure is what makes day trading potentially profitable. Instead of the “per trade” structure, day traders pay “per share.” As a day trader, you would pay about $0.01 per share compared to $10 per trade.

Mobility

You could literally day trade anywhere that you have a good computer and a reliable internet service provider.

What will hold you back and the solutions to get you started

There are usually two major factors that block a person from getting into day trading. One of them is their day job which isn’t so easy to let go of considering the uncertainty of success in day trading. The other is a lack of funds.

Lack of funds as required by SEC

The SEC requires retail investors to $25,000 cash on hand to make 4 or more day trades with a 5-day period. You will be tagged as pattern day trader, and your account will be frozen for 90 days if your account drops below $25,000. This being said, you would need more than $30,000 not to fall under the threshold in the event of a few bad trades, unless you are a part of our CAP Program where you can start day trading with as little as $3000 and we provide you rest of the funds to trade with. More info about that here

If you were planning on becoming a day trader to make some side income, can you go 90 days with collecting any money while your account is frozen?

You will read or hear plenty of stories about traders earning their fortunes day trading starting with less than $5,000 and that is absolutely possible but not as a retail trader with a retail trading account. Joining a hedge fund such as ours is where all this is potentially possible

Working around your “real” day job

Apart from the lack of funds, the other blocker deterring you from day trading is the fact that you have a full-time job.

Other side businesses can be done outside of regular office hours. You can work after your normal shift or even on the weekends. Side jobs allow a lot of flexibility. Day trading will require you to be available from 9:30 am to 4:00 pm. This means that while you don’t have to stay glued to your desk for the entirety of six and half hours, you still have to be attentive during a portion of the day.

In a perfect world, you would have the option to quit your job and make your fortune day trading. But quitting your job until you are absolutely sure that you have the ability to reach complete financial stability relying on day trading alone.

With the reality of your lack of funds and a real job holding you back, your only other option may be to go international.

First of all, day trading the international markets does not have the same pattern day trading requirements. Unlike the US, you can start with anywhere from $5,000 to $20,000 with day trading the international markets. Don’t forget; you need to cover commissions and in terms of growing your equity curve, time will handle that.

Thanks to the many breakthroughs regarding accessing global markets, you can now trade on international stock exchanges. In the past, trading international markets was only reserved for those who day trade forex or futures.

Additionally, the time issue is resolved when you trade the international markets thanks to the different time zones. You can figure out a time that works for you and a comfortable schedule outside your regular working hours. For example, a day trader living on the east coast could day trade Japan which opens at 8 pm EST. And if you are a day trader living on the west coast, you could day trade the HKSE which would open at 6 pm your time.

The beauty of trading the international markets is that you get to keep your real job which is currently your most reliable source of income. You would work your regular hours and can come home to trade international markets in the evening. The opportunities are limitless when you consider that across North America, Europe, and Asia, there are more than a dozen global markets you can trade in.

The experts at Live Traders know what it takes to become a successful trader. If you think you have what it takes to become a day trader and want to learn the fundamentals of trading and the secrets behind trading success, contact them here.