There is a lot of hype around day trading. Some websites promote it as a means to get rich quick (it isn’t), and others say it is impossible (also not true). There are lots of day traders around the world who find success and make a living off the markets, so the truth lies somewhere in between those two extremes. If you’ve thought about day trading, it’s worth your time to read through this list before you do, so you know just a little bit more about what to expect if you decide to proceed.
Time Investment to Day Trade Successfully
Day trading isn’t a get a career that is quick that is rich, nor is something that takes years to attain consistency. Before you become comfortable with it in all conditions, expect to spend six months to a year honing your skills and practicing a strategy.
The problem most news traders make is that they don’t practice a strategy in a demo account for several months or more. Therefore, they have no idea how a strategy works, and how they need to adapt, in various market conditions. This leads them to find something new, to abandon the strategy and start all over again. In the event, you choose this path you will never be successful. Instead, commit to spending six months every day practicing a specific process of trading. With the latter approach, you stand a good chance of becoming profitable and consistent.
Capital Investment for Day Trading
Different markets require different levels of capital to day trade.
Stocks are popular, but also the most capital intensive. In case you want to day trade stocks in the US, the absolute minimum you need is $25,000. And you will actually need more because you must keep your balance above $25,000, otherwise, you can’t day trade.
Should you day trade forex you can begin with as little as $500 (less is not recommended).
Trading futures you can open an account for a minimum of $1000 with some brokers, but if trading a popular day trading contract like the S&P 500 E-mini you’ll want to start with at least 7000 or more. ideally $ $3500, or
Anticipated Monthly Income From Day Trading
It’s recommended new dealers only risk 1% of their account (or less) on a trade. That means if you lose on a trade it has a very small affect on your overall capital balance.
If risking 1% per commerce day traders can expect to make between 10% and 30% a month. There may be some losing months as well, and some months that are higher than 30%, but assume that 20% will be your return on average. Depending on how much capital you trade, that gives you your approximate monthly income. Note the more capital you have, usually the lower the percentage return— than it truly is to make the same yield on large amounts of capital, it is easier to make high returns on small quantities of capital.
Where was that 20% figure attained? For detailed scenarios on how much you can expect to make, see How Much Can I Make Day Trading Futures, Forex, and/or Stocks.
Keep in mind, these figures are based on having a solid method and having practiced it in all market conditions.
It will likely take six months to a year, or even longer before you can anticipate these yields on a monthly basis…as the “Time” section above discussed.
Hurdles to Day Trading Successfully, Consistently
Day trading poses a number of hurdles. Mostly, each trading day is slightly different. You will need a trading strategy that works in nearly all market conditions. That doesn’t mean you will win. On the contrary, even with a fantastic system, you may still lose money four or five days a month, but overall you are rewarding (see above). You’ll need a method that adapts to market conditions, normally this means contain a lot of indicators you will wish to avoid systems which are excessively complex or demand constant research.
As an example, if you want to learn how to day trade stocks consider using a simple price action strategy.
Day traders also face psychological hurdles. There is no guaranteed paycheck, which can weigh heavily when bills are due but your trading is not going well. This is often a vicious cycle leading to more trading mistakes and worse performance.
Invest in Yourself, Not Applications or Gimmicks
Software and gimmicky get rich quick products that promise riches immediately usually have a very short shelf life. They may work for a little while, but ultimately they will fail you unless you know how to make adjustments to the applications yourself. Instead of getting suckered into trading product scams you’re much better off spending your time and money on your own education.
Read books and articles on trading. Consider mentoring from someone you have followed and who’s method you feel would work with your character and needs. Invest in your own education, not trade signals you pay for each month or expensive subscriptions -these merely serve to make you reliant on someone else. Invest in yourself on your own, no matter what happens you have the skills to get the job done, from the start, that way.
Final Word on Day Trading
Expect to put in at least six months to a year before you start to see any sort of profitability and consistency. It may come sooner, and that’s a bonus, but do not assume that it will. At least $500. demands at least $25,000, forex is required by day trading stocks And for futures, you will want at least $3500 or more. Focus on simple methods that you could work on and practice yourself. Don’t become too reliant on others. In the long run, you’re better off investing in yourself and an education that will last forever, not blowing cash on signs or gimmicks that offer no long run benefit to your trading career.