When looking for information on how to practice day trading for a living you need to look beyond the strategies and promises of huge returns. Day trading can be a lucrative career for the right personality, with the right financial backing, and with the right life style. Can you make a living day trading? Of course you can. Should you choose this as a main career? That is a completely different question. It takes experience, knowledge, discipline and tremendous poise to really day trade for a living.
Before you quit your job you should know the SEC requires all day traders to maintain an account balance of at least $25,000. If you don’t have this amount of money yet you are probably better off than most new day traders. While you’re saving your account minimum practice the following strategies and tips to improve your chances of pulling off day trading for a living. Just be a little wary of all the hype around penny stocks online.
Day Trading Strategies
The most common day trade strategies are scalping, fading, pivots, and momentum. Scalping is the home of the market maker where you will sell virtually as soon as your receive confirmation of the trade. Scalpers are literally looking for one tick up or down. Faders short sell stocks after a real strong move upward planning on people to take their profits. Pivot trading involves planning a likely high and low for the day based on market indicators, chart patterns, and classic volatility of the stock. Then when the stock reaches near that low it is purchased and sold near the estimated high for the day.
If you wish to slow your trading down consider slower moving financial instruments like bonds, the FOREX, or regular stocks. To increase your trade rate and leverage you can trade options, commodities, or even try day trading penny stocks.
Day Trading Tips
The hardest part of making your living with day trades is keeping your day trading activities professional. It’s easy to get lulled into staying in your pajamas all day while you trade. You’ll probably find yourself flipping the television while you review your game plan. This is no way to run your business.
When you treat your trading like you are running your business you’ll find gains in areas besides the return on investments from trades. You’ll use the extra time to negotiate better deals on your commissions, read more to learn more, better narrow your list of the best online brokers, review your previous trades to understand where emotions may have interfered, or learn to better balance your money management with good portfolio risks practice.
Day Trading For A Living
Here are some good general rules to get you started:
- Pay all of your day trading taxes. Day trading keeps you in the highest possible tax bracket in all of stock market investing. Make sure all of the extra effort (tax adjusted) is worth it compared to low maintenance investing.
- Never risk more than 2% of your portfolio on any given trade. That doesn’t mean that all the money in any trade is 2% of your portfolio. You can reduce your risk by setting stop losses.
- Keep a trading journal. By writing down each trade with your thoughts on the trade you will at least keep yourself accountable to yourself. Even better is to meet with a trade partner once a week and discuss the week’s trades. The stories will force yourself to dive deeper into your trading decisions.
- Day trades require as much psychological fortitude as they do money. If you don’t have the will to follow your plan, it is not a viable option.
Day trading for a living requires that you remember to have a living. It can be easy to fall in the trap of thinking life is about trading. You need to get out and be social with people outside of the day trading world. It will help you keep perspective on what the real world uses the financial markets for and why. I hope this new article Day Trading Penny Stocks article opens your eyes to the intimidating but exciting world of day trading.