While the thought of becoming a day trader might seem glamorous and exciting, the reality of the situation is that it usually isn’t. In fact, the life of day trader can actually become quite mundane and boring, as every day is similar to the last.
If this is the case then why do people choose day trading for a living?
Ultimately, the number reason is because the pay-off can be huge. Let’s face it, there is not many careers or professions where you could potentially make millions of dollars while sitting at home on your computer all day.
Also, many day traders experience a sense of freedom while working for themselves, with no boss looking over their shoulder every minute, and no annoying co-workers to deal with.
Add to this the fact that a day trader can work anywhere in the world, as long as they have an internet connection, and it’s easy to see why day trading is such an appealing option to thousands of people from all walks of life.
Let’s take a closer look at just what is exactly involved in the life of a day trader…
Following the movement of stock prices
If you take your eye off the ball for too long, you will lose out. Day traders need to pay attention to the movement of stock prices on a consistent basis in order to be able to quickly identify profitable trades.
This means long hours in front of the computer, constantly keeping up with events in the market and working out your next move.
This kind of lifestyle isn’t for everybody. Not everyone is able to cope with the solitude of being on their own, and quickly start to miss the companionship of having people to talk to in the office.
Also, if you are used to working at a job where you are on your feet the majority of the day and physically doing things, then you may find sitting at a computer all day tough to handle.
Making quick decisions
A day trader must live and die on their decisions. One false move can mean huge losses, which can take a serious chunk out of your day trading account balance.
However, although there is a lot at stake with every new trade, this doesn’t mean you can afford to take your time thinking things over for hours on end. Due to the nature of the business, day traders are not granted this luxury, and instead they must make decisions quickly in order to profit from the markets.
This means that sometimes you might just have to go with your “gut feeling” and make the trade.
Failure to act quickly will mean that opportunities often pass you by, with the end result being no substantial profits at the end of a trading day.
Every day trader will get stressed at one time or another. Some more than most. The key is not to avoid stress but to learn how to deal with it.
A good day trader can feel stressed but still keep a clear enough head to make the right decision. Stress only becomes bad when it affects your thinking and leads to making stupid errors. Once this happens you are toast, and it’s time to take a break or leave the trading world altogether.
Getting involved in day trading means buying and selling a large volume of stock over the course of just a few hours, and the sheer amount of information and changing circumstances that you need to process in a short time frame can quickly lead to the stress piling up.
The best way to deal with stress as a day trader is recognise it before it overwhelms you. Then, take a few minutes to reset your mind, and even do some relaxation techniques such as deep breathing. Once you feel more relaxed, re-focus your mind and get back to the computer.
Are you ready to become a day trader?
Now that you have a better understanding of what a day trader does, are you now ready to start doing it for yourself? If so, then here are a few tips to get you started…
Did you know that the majority of people who try their hand at day trading end up making no money at all?
In order to avoid this, you need to educate yourself on the day trading fundamentals. Invest in some of the basic day trading books that will give you a good overview of the industry as a whole, as well as finding a company who offers training courses to take you through your first few steps.
Get a mentor
One of the best ways to ensure your success as a day trader is to find somebody who is already there.
Maybe you have a friend who is a successful trader? If this is the case, then you should definitely ask them if you can sit in while they are trading, as well as getting as much advice from them as you can get.
Reading books and enrolling in training courses is great, but there’s nothing quite like learning from a mentor.
Start paper trading
Before you actually start risking your own money as a day trader, it is a good idea to try paper trading first.
This can be as basic as watching the markets and then writing down the trades that you would make if you were actually trading. After a few weeks of doing this, you can refer back to all of the trades you made and see if you have been profitable.
Also, there are many different day trading software programs available, which can actually set you up with a demo account. This means you have the benefits of using actual day trading tools and news feeds to make your life easier, while not actually risking any of your own money.
The life of a day trader is not for everybody. If you think it might be for you, then the best course of action is to try it out for a few weeks in your spare time. By doing this, you will quickly find out if it’s the right career path for you.