It is possible to make a living out of day trading. Day traders can work alone or work for big, financial institutions. Typically, day traders who trade for a living work for larger organisations. Day traders who work for corporations have access to dealing desks and have large amounts of capital and leverage. They are also able to use analytical software to help with their trading decisions. These types of traders are often searching for easy profits which may be linked with new events or even arbitrage opportunities. The variety of resources available to these types of traders means they are able to capitalise on low-risk trades before individual traders are able to react to market positions. However, despite this, it is still possible for individual day traders to do the same thing
Individual traders can trade with their own capital or they also have the option of managing another person’s funds for a living. Generally, at-home traders do not use a dealing desk but they tend to have strong connections with brokers and other relevant resources. This may be due to high levels of commission spending for example. Individual day trading does involve a higher level of risk as resources are more limited. Instead day traders use technical analysis to make their trading decisions. Swing trades are also popular amongst individual day traders. This is often combined with leverage which can help to boost profits on small price movements in highly liquid markets.
When day trading you can buy a financial security and sell it a few seconds later or a hours later that day. This means that you can be trading with a variety of different financial instruments at one time. Day traders or traders who trade for a living do not ‘invest.’ Instead day trading involves buying and selling in a short amount of time, investing requires holding onto securities with a long term perspective. There is the attitude that day trading is a form of gambling. However, day trading for a living requires substantial, thought out strategies and analysis, which differs from playing markets without much thought. However, day traders can experience bursts of adrenaline which is similar when gambling.
Before considering taking up day trading for a living you need to consider the fact that day trading can be dangerous. It is extremely high risk and a lot of trades involve the use of leverage or margin trading. Discipline is necessary when day trading for a living. The most successful day traders make their trading decisions based on their experience, from continually improving their strategies and investing time in researching all factors which involve their markets and specific trades. It is important to establish long term goals and determine how much money you are willing to lose before starting your career as a day trader.
Risk warning: Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.