Day trading for a living was my dream once. If you’re here, it probably is yours. That’s amazing, girl!
While others are stuck in their boring 9 to 5 jobs, you are here, looking for information to fulfil the dream to become your own boss.
I’ve turned my dream into reality, so how to day trade for a living is a question that I get A LOT. Everyone wants to know, but some people think this is an easy dream, and worse, an easy way to get money.
If you came here thinking that was it, don’t worry! I’ll help you enter the right mood and develop the best mindset to day trade.
When you understand all the day trading basics, and practice enough to understand the advanced, you’ll probably get the money you want. That doesn’t mean you won’t be working. You’ll still commit – with yourself and with your career as a day trader.
Day trading for a living mindset
It doesn’t matter how much you know about day trading if you aren’t ready to do it, right?
It’s like owning a piano, studying every day how to play, becoming a master in piano theory, but being afraid to touch the keys.
Or trying to comfort a friend in a situation we never went through. If we’re not in the right state of mind, putting ourselves in her shoes, we’ll never be able to make her comfortable and make her feel good again.
Recommended reading for new traders:
Day trading is just like this.
First, you should try to develop some traits very characteristic to a day trader’s personality:
To understand how you can apply these personality traits into becoming a badass day trader, check Top Traits of a Day Trader Personality.
When you treat day trading like dieting, for example, is 100% easier:
You create a trading plan
You avoid the seek for perfection
You have a process
You know the right time to trade
You have discipline over the trading plan
You know what your Achilles’ heel is
To know how to treat trading like dieting effectively, check this article. If you are a dieting addict, make sure you use everything you can to apply the primary principles into your day trading for a living journey.
During & After Day Trading
Day trading may feel like a rollercoaster until we start seeing the patterns that repeat over and over whenever we use our chosen strategy.
However, we must understand how to detect these patterns. Otherwise, we’ll lose what makes day trading for a living effective.
The patterns and chart analysis will eventually shape our mindset; this way we won’t keep making trading mistakes like leaving too early or too soon off trades.
A fantastic tool for starting to understand day trading patterns and prevent trading for impulse is the trading journal. We’ll talk about it later.
Mindset is a big deal, and it is an aspect you should work on every day to understand how to day trade for a living.
What do I need to start day trading for a living?
Mindset is of the utmost importance, sure. However, you’ll still need a few resources actually to start day trading.
How to learn day trading
If you’re a total beginner, you’ll undoubtedly need resources to learn HOW to day trade, right?
Recommended reading for new traders:
Learning how to day trade is the first step to start trading for a living.
A monitoring day trading tool – Trading Journal
As said before, a trading journal is an excellent way to keep track of your trading activities, and it is essential for day traders.
I always recommend the use of an automated trading journal for my readers. The name of my life-saving trading journal is Edgewonk, and I’ve written about it in the article How a Trading Journal Helped Me Double My Profits.
The best thing about Edgewonk is that you can use it in any country in the world with any currency or market.
May be you’d like to learn how using a trading journal helped double my profits!
If you’re serious about day trading as a living, you are basically creating your own business.
Notably, in this case, a trading journal is essential, even for taxation purposes, because you’ll know exactly your entry and exit points, and how much you profited!
Know your taxes
Day trading will replace your regular job, so you’ll need to be extra careful when dealing with taxes.
No matter where you’re from, you are likely to pay taxes for your day trading activity.
There is an article about tax treatment for day traders here. The gist is:
|– Day traders who consider trading as their jobs (self-employed) are taxed as a regular independent individual.
– Business tax and obligations under the third tax bracket.
|– Section 1256 for regular commodities is the best for forex traders||– You’ll fall under the business income tax regime: you can deduct 100% of your losses and claim expenses related to your day trading activity to reduce tax liability.||– You can also deduct your losses and claim expenses related to your day trading activity to minimize tax liability.||– Minimal day trading taxes that vary from 0% for those earning up to $22,000 to 22% for earnings above $320,000.|
The best day trading broker
Next, no matter where you’re from, you’ll need a broker to day trade.
There are several great brokers out there, and you should always choose them based on your needs as a day trader.
If you’re starting slowly, as a swing trader, you have many great options that will make your change into day trading easier.
I’ve done a few reviews about trading brokers, but I’ll talk about each of them shortly here. If you’re interested in learning more about a specific broker, click on the name.
A broker with a fantastic tool for beginners, eToro features the best social trading platform I’ve ever seen: eToro CopyTrading. It allows for us to copy a percentage of a trader’s activity and profit the same way she or he is profiting.
If you’re starting, you might want to check their demo account option and fund your trades later.
eToro is great for day trading, featuring no fees for stock and ETF trading in the EU.
A famous day trading platform with low trading fees, Plus500 is an option to consider.
If you know you won’t be able to keep your profits on the platform for a long time, I have good news: Plus500 offers 5 free withdrawals per month, with only $10 for each additional withdrawal!
Just like eToro, Plus500 also has a demo account option for the beginners – it’s free of charges, and they’ll give you some play money to practise your strategies in the real market.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Robinhood is the sweetheart for options traders, but it doesn’t matter what you day trade, you’re good to go with Robinhood.
If you trade non-US stocks, be aware that the fees are incredibly high. However, Robinhood has a structure of zero trading and non-trading fees for all US stocks and ETFs, which means you can trade with them without spending with the commission, management, and other typical fees.
Although the minimum to have in the account for day trading in the US is still $25,000, you can start trading stocks with a $10 minimum trade, and the penny stocks don’t fall behind!
If you’re interested in trading crypto, Binarycent is your go-to broker. It offers 14 different cryptocurrencies for trading and copy trading features similar to eToro’s.
Binarycent is great to day trade for a living, featuring the intraday option for those interested in trading several times within the same day.
If you want other options for crypto trading platforms, check here!
How to day trade with less than 25k
In places like the UK, the money required to start day trading will typically depend on the broker.
However, if you’re in the United States, you’ll have an extra challenge to start day trading – the Financial Industry Regulatory Authority (FINRA) established that you need to maintain a minimum account balance of $25,000.
This amount falls upon traders who make four or more day trades in five days. If you want to do this and you live in the US, you’ll need the 25k.
However, we’ll give some tips for those who want to know how to day trade without 25k. You can consider the following options:
Make only three day trades in five days – The obvious solution. Don’t break the law and stay off the day trader classification. This way, you can increase your capital and eventually have the required 25K. This is good to train the patience skill but will prevent you from practising as much as you should. You can always have a demo account in another broker as well.
Day trade outside the US – No, you don’t need to travel far away. Find a broker and a stock market that are outside the US that doesn’t have the 25K account minimum.
Do swing trading instead – We’ve discussed swing trading a lot! This can be an excellent alternative for those willing to trade but not specifically to day trade. You can start with swing trading and trace your way to day trading for a living!
Join a day trader firm – There are day trader firms for people who don’t have the full 25K. They leverage your capital, and your deposit safeguards them for losses. I don’t recommend this option, however. It’s money you’re borrowing from others.
Trade in a different market – Forex, for example, doesn’t have a legal minimum, but if you want to make a consistent income, start with at least $5,000. Futures also don’t have a legal minimum but start with at least $2,500. Both are great markets to day trade until getting the 25K to day trade in the stocks market.
For a proper strategy, you can combine some of these tips. For example, let’s say you are already swing trading. That’s amazing.
You can continue doing that and start day trading in other markets that don’t have a minimum – trade Forex, Futures, Options, and more.
Diversify your portfolio as much as you can, and good luck becoming a full-time day trader!
Recommended reading for new traders:
So how do you day trade for a living?
To sum it up, day trading for a living is like creating a business.
We need the right mindset and resources such as knowledge, a proper broker, and initial capital – it still feels easier than creating a business from scratch, for example, but the risks can be similar.
If you are indeed decided to day trade for a living, start by investing in your knowledge and learning everything about chart analysis, tax treatment and trading, itself.
Knowledge will be the main primary source of your trading career – the initial capital will only multiply if you trade wisely.
Recommended reading for new traders:
Anyway, this is my article on how to day trade for a living. I hope I’ve contributed to your dream somehow, so let me know in the comment section below what are your thoughts!
Tell us: Do you already day trade for a living?
If so, how is your experience?
If not, what motivates you to do it?