People who want to make a living as a financial trader come in two categories. Most of them work for large institutions while a few work independently. It can be a much easier life for professionals who work for someone else. They have access to tools and opportunities that it would be difficult or even impossible for someone to access on their own. However, there are people who manage to be a successful independent professional day trader. Is it a practical and realistic choice or is it better to stick to trading in your free time?
Learning the Skills
Access to individual day trading as a career is open to everyone, but only a few will be able to use all the right tools. It is often taken up by people who have previously traded within an institution. But it’s becoming more popular with inexperienced traders. If you want to look into doing it full-time as an individual but you have no experience, you first have a lot to learn. Some people start off by taking trading classes. They can learn what they need to know in individual lessons. You can take a course online, or you could find somewhere you could attend in person. Other people start trading by reading books and online resources and then learn as they go.
Working as a Day Trader
An individual day trader will usually work in different ways to how someone connected to an institution might work. Usually, a dealer will either work with their own money or manage other people’s. Not many independent traders can access a dealing desk. So they aren’t able to perform the same trades as institutional dealers. But many people have ties to a brokerage and other resources they can use to trade. Individual day traders often need to take more risks than others. This is because they can’t compete against non-independent traders.
If you want to start trading using your own money, you need to be prepared to put up a lot of capital. You need thousands of dollars to get started. You preferably need somewhere into the hundreds of thousands. Anyone who wants to start trading with less than $50,000 is at significant risk of running out of money very quickly. Even when you have upwards of $100,000, you might not be making enough to support yourself and your family. However, depending on your circumstances, you might find that starting off with a smaller amount of money works for you. Other options are working for a company or a prop firm.
Is It a Good Idea?
Day trading won’t work out for everyone, but those who are good at it can succeed. However, if you’re a complete beginner, you should be very cautious about giving up your day job. Start by learning as much as you can and trading in your spare time.
Think very carefully before you do any trading, even if you’re just doing it on the side. Make sure you know what you’re doing so you can start off on the right foot.