As the prospect of working from home is becoming more and more of a reality to most people, the online world has opened up to allow more into the world of day trading.
But can you make enough to live on day trading alone? Let’s find out.
What Do Day Traders Do?
Day traders are people who buy an item, hold it for a couple hours/minutes/seconds and then sell it off again.
The items could be anything from stocks, commodities, currencies, crypto items like NTFs, literally anything.
Day traders very rarely hold their items for longer than a day. The idea is to create profits from short-term price improvements.
Because the items they are selling and buying are constantly growing or dipping in value, many day traders use “stop loss” orders. These orders force a sell of the item when it reaches a certain price.
For example, say a trader bought an NTF for $100, and implemented a stop-loss order on it too. The NTF grows in price to $120, but then dips to $99. Because of the stop-loss order, the trader’s broker automatically put the NTF put for sale at $100 to prevent losses.
Day Traders have to manage this level of risk and reward, because a stop-loss order will also prevent the NTF from growing in value again as it is instantly sold on.
A day trader’s job is essentially weighing up risks.
Can You Live Off Money From Day Trading?
Yes. You can make money day trading, and if you understand the world of stocks correctly, you can make a living from it too.
However, don’t be fooled – day trading is as much of a job as any other. You won’t be spending your day clicking through bids and drinking martinis.
Instead the real gain from this is your ability to be your own boss, work when you want to, and work how you want to.
You should be warned about the possible scams floating around. Some people will claim that you can make a fortune on day trading. However, these claims normally lead to buying something. Remember, there is no such thing as easy money.
But don’t be put off either. Yes, there is no such thing as easy money, but there is such a thing as easier living. Earning enough money to make a living doesn’t mean rolling in dollar bills. And if you live in a low-cost location, the goal could be even more achievable.
Benefits Of Day Trading
With anything, there are drawbacks and benefits to the job. To help you decide if day trading is the occupation for you, we will list them out for you.
Because you can work from home, you don’t need to spend money on traveling to and from work. This means no expensive train ticks, no more hard-to-find parking spaces, and no more constant top-ups for gas.
All you need is an internet connection, a computer, and some capital to start you off.
2. You Are Your Own Boss
Being your own boss means the only person you have to answer to is you. No one will be demanding overtime from you. No one will be cutting into your day with meaningless chatting. You can manage yourself, which leads us nicely into the next benefit.
3. You Control Your Hours
Being your own boss and working on the internet means it doesn’t matter when you start and when you finish.
If you want to get as many trades in by the end of the day, you can work for literally 24 hours. If you want to take Wednesday, Thursday, and Friday off, then that’s your decision.
You manage your own working times, and as your own boss, no one will demand that you get back to your desk.
Drawbacks of Day Trading
With freedom comes instability, and the majority of a day trader’s occupation drawbacks from this lack of consistency.
1. No Colleagues
We are social creatures, and even if the office life is tiresome, the lack of natural socialization can make a day trader lonely. If you love the gossip and shenanigans that your co-works involve you in, then day trading might not be for you.
2. Inconsistent Salary
In the day trading world, you’re going to have good days and bad ones. You might make $2,500 one day and lose it all the next. If you need a stable salary, then this job will not be for you. Lenders, for example, will not look kindly on you. And if you want to buy a home, that lack of consistency will put a red flag by your name.
3. Algorithms Are Your Enemy
All over the day trading market, you will find automated systems and bots doing the same thing as you. They take up around 60% of the market. If you can get your hands on a bot, then your day trading life will be easier. But if it’s just you behind the desk, then you’ll need to act smarter than the algorithms.
You can make a living day trading, however, your finances will not be consistent. This goal is definitely achievable if you’re happy making the bare minimum.