Does Day Trading Work?


Does Day Trading Work?

*This post may contain affiliate links. As an Amazon Associate we earn from qualifying purchases.

If you’re looking for a new work-from-home position, day trading is a possibility. Many people consider it as an option but it certainly isn’t for everyone. 

You will want to make sure that you first know whether or not this type of job will work for you and whether it will work to make money. 

12 Data Entry Jobs You Can Work Fro...
12 Data Entry Jobs You Can Work From Home

Day trading can work for everyone, although many first-time day traders lose more than they make. You need to have discipline and treat day trading as though it’s your job to succeed. 

Also, you’ll want to know the market as well- having good information is key!

Overall, day trading can work if you put in the effort and do your research. You won’t want to quit your regular job just yet, as many traders fail when they start. 

Trading is easy however trading profitably is not. If day trading was as easy as all the “gurus” make it sound then everyone would be millionaires. 

What happens when most people try to say trade is they end up holding onto their losers and winner longer than they should and miss out on massive gains (by not taking profits) and get massive losses (by not selling their losing stocks/options. 

Although the concept of day trading is simple, getting it right is far from it. However, with experience and strong discipline, you can increase the odds that you’ll make decent enough profits to live on. 

Why Day Trading Works

According to Investopedia, day traders need to sell before the end of the day to officially be considered day traders. Some people take a bit of a broader approach to day trading and could use this term to me trading regularly while still holding some stocks or options overnights. 

A day trading strategy can work because the traders make a lot of trades for minimal gain, which adds up over time. Day trading works the best when traders put in a lot of time and effort so that they can gather the most profits possible and quickly sell out of trades that don’t go their way. 

Many day traders also will work on perfecting one strategy. Once they do, they can easily use this process time and again to earn money. 

Overall, the successful day trader often has a ton of experience using a single investment strategy.

You can use the same methods to make day trading work for you. You’ll need to learn how to watch market fluctuations, then learn to respond accordingly. 

The more experience you have with the stock market, the better you’ll do.

Day trading only works when you put in the time- many pros will day trade for many hours at a time with no breaks! You should consider this your “real job” if you want to go all-in and become a real trader. 

Most Day Traders Fail In Their First Trading Year

Every professional trader has a different idea of what success means. If you want to be a full-time day trader, I’d assume that you want to make a living off day trading without the need for another job. 

However, you need to understand that most new-day traders fail.

About 80% of day traders fail during their first year. However, this is primarily due to them being unprepared, overconfident, or not having or following a strategy. 

If you go into day trading with all the possible information while following a set strategy religiously, you’re more likely to find success. While an 80% failure rate is very high, you don’t need to give up just yet!

Many start-up companies also have similar rates of failure. So, if you want to succeed, you’ll need to put in the effort to learn and grow. 

You’ll also want to set aside enough money for your trading accounts- while still being able to buy food and pay your rent. 

Many day traders start with a penny stock or cheap options then move to more costly (yet profitable) assets. 

How To Make Trading Work For You

Beginner day traders need to have access to plenty of information before they start trying to turn a profit. You’ll need to know what indicators to look for in the market and what reliable sources are. 

From there, you can research thoroughly. 

I recommend that you start by reading Andrew Aziz: How to Day Trade for a Living. It includes all the fundamentals of day trading and provides you with all the strategies you need.

It’s also essential that you have a good computer and reliable internet connection. Slow responding hardware could cause you to lose out on a good trade! 

Plus, you’ll also need to have access to a good broker. You should choose one that doesn’t charge a ton of fees per trade as each fee that you are charged will eat into your possible profits. 

Finally, the most crucial factor you need to make day trading work is a strategy. You need a system that works for you! 

You may need to reference charts and track information on your own. 

Overall, it would be best to use the strategy to make winning, profitable trades as often as possible. The strategy also needs to help you cut the losses quickly rather than holding and hoping. 

It can take a while to develop a strategy that works the best for you.

Reduce Trading Risks By Understanding Risk Management

You need to understand the risks that come with day trading. You won’t want to take on too much risk, as it can come with several complications and a ton of stress. 

Many beginners don’t take the time to consider their risk management. Luckily, it only takes a few minutes and can give you an edge against the competition.

You can start managing your risk by learning about two different essential strategies. 

These include:

Stop-Loss

This strategy allows you to sell the stock and take a loss. However, if you hold onto the stock for too long, you’re sure to lose even more money. With a stop-loss, the main goal is to cut down on the amount of money you lose on a failed trade.

It sounds negative, but not putting a stop-loss in place when needed can lead to even more severe risks. With day trading, your main goal is to profit on smaller trades consistently. 

There’ll come the point when you need to initiate a stop-loss as a beginner.

In short, this is one of the most important strategies to know! You’ll also want to know when to sell your stock.

Take-Profit

You have to know the price that you should sell the stock, take your profit and move on. It would help if you kept this in mind as a day trader. 

Otherwise, you could accidentally hold the stock for too long and lose out on some good profits. With a take-profit point constantly in mind, you’re sure to make small profits on every trade.

While the profits are small- they do add up! You can earn a livable income by selling as soon as you hit your “take-profit” point. It’s better than risking your profits, especially if you want this to be your day job.

Overall, it would help if you didn’t forget about these risk managing strategies. You’ll likely need to use them on your very first-day trade!

If you don’t set a stop loss your trade could go against you and you could lose far more than you’re willing to on a trade. If you don’t take a profit you can quickly take what would have been a winning trade and turn it into a losing one. 

Final Thoughts

To summarize, day trading does work and has for many people. If you’re interested in trying it out, you’ll want to budget your funds carefully and only invest a small percentage on each trade. 

From there, you’ll want to work towards making a profit. It can take some experimenting and time to learn how to make good trades. That’s where filling a proven strategy can help immensely. 

Overall, it’s essential to realize that it takes a lot of work and research to make money day trading. Most beginners don’t put in the effort required of them, so they end up failing. 

If you arm yourself with more knowledge, you can make the odds better for yourself. Then you just have to have the self control to follow your strategy even when your emotions tell you to hold a stock longer than your strategy does. 

Recent Posts