Is Becoming A Day Trader Right For You?

in Day-trading

You've probably been doing some reading about what day traders do and how they make a living, right?  Buying and selling stocks within minutes to hours for profits that can compound quickly is a very tempting way to make money either part-time or full-time.  But, will working as a day trader at home be right for you?

The idea of having a day trading business right in your own home office, working on your own terms is an attractive proposition for many.  Lets take a look at the advantages of this occupation.

Of course, the biggest improvement over a regular job is having no boss.  Nobody to give you orders and no one to hold you back from earning more. If you become a good day trader, the only person that can limit your progress and income is you, your attitude, work ethic and trading psychology.  More on that in a moment.

None of that nasty office politics to get involved in anymore.  Does anyone really enjoy it? Don't think so.  As a day trader, you can walk into your trading office with a cup a coffee in the morning, prepare for the trading session and not have any interruptions from co-workers or even employees if you were self-employed owning a regular business. Just peace and quiet.

Feel like taking the day off or going on a vacation?  Not a problem, turn the computer off and you're ready to go.  Try doing that with a corporate job or standard business.  It's a bit more complicated to take time off, isn't it?

 And, if you are self-employed now with a brick and mortar business, you know how dealing with employees, customers and those occasional visits from inspectors can be a real hassle, right?  None of that with day trading.  As a day trader you are on your own.  None of these pressures or hassles are present. 

The start-up costs to become a day trader are ridiculously low compared to the potential income that can be made.  Compare it to starting most b&m businesses and all the complications that go along with it, like hiring/training employees, getting licenses, loans, leases, etc., and it's no wonder why so many consider day trading a great opportunity.  If you've got the cash, a margin account, a computer with internet access, trading software and the "know how", you're good to go.  No college degree required here.  If you choose to do so, you can learn this business completely on your own.  What other potentially high income occupations are there that are basically unfettered by restrictions on who gets in?

OK, so being a day trader sounds great, right?  What's there not to like?  It seems like the perfect business. Why aren't all your neighbors doing this if it's so easy to get started?  The truth is day trading is very easy to get into, it is a great business and it can be as easy as clicking on buy and sell buttons to make money, but there's a lot more to it. 

To make money consistently enough to stay in this business...and really just about anyone can have a lucky streak, you've got to thoroughly educate yourself.  Just like any other potentially high income earning occupation like a doctor, lawyer, professional athlete or musician, there is a very high requirement for education and/or skill.  As mentioned, it's not required to get started, but it is most certainly a necessity to keep your trading account from going down to the point where you'll be out of the game.  Luck in this business will only carry you so far. 

But, even some aspiring day traders that are adequately educated and skillful will have difficulty mastering other aspects of this business.  It's simply the nature of the job.  Some people that are extremely extroverted may have trouble working on a daily basis by themselves in their office with no co-workers or employees to talk to.  The feeling of isolation can very troublesome for some people.  This can be especially magnified on losing days, when there is know one to talk to.  Some traders form online groups with instant messaging to combat this potential problem.

Another hurdle that must be surmounted by day traders on a weekly basis is losing streaks.  Trading psychology must be mastered by each and every trader in his or her own way.  Unlike the security of a job with a paycheck in which you always get paid for work done, day trading requires one to be able to conquer the trading demon that brings down so many aspiring traders.  Every trader without exception must go through losing streaks.  There are days and sometimes weeks that traders will put in full work days, only to walk away from their desks with less money in their accounts.  This can be absolutely devastating to one's psyche if not prepared.

 A trader must become very familiar with his trading strategies or systems to understand the characteristics of potential losing streaks in order to at least have a feeling for what to expect in the future, otherwise losing streaks can cause one to bail on their trading plan just at a time when a winning streak may be around the corner.  Some trading strategies, such as trend trading inherently have a high percentage of losses, even though they can be quite profitable.  Some traders, because of their individual trading psychology will find these types of low win% strategies almost impossible to trade.

Lets assume for a moment you've got what it takes to be a day trader.  To make money you've got to be in your office day after day, right? Are you motivated enough to push yourself to work everyday?  That's something you should really consider.  Many people can't do a job unless they are constantly pushed by someone else (like a boss).  You might know people like this...they're smart, but just can't seem to get things done.  Don't even think about becoming a day trader unless you're extremely self-motivated.  It just won't work out for you.

 

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Barry Edwards has 2 articles online

 Visit Day-Trading-Stocks.org for more information about day trading.

 

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Is Becoming A Day Trader Right For You?

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This article was published on 2012/05/14