Have you thought about trading stocks for a living? Check out this complete guide to starting a career buying and selling stock shares.
Have you ever wondered whether you might be able to make a full and regular income just by buying and selling shares? There are plenty of famous examples of people who have earned their millions by doing just that. In fact, some forums in the current marketplace make it seem like anyone can become a millionaire overnight.
Of course, the truth is that, like with any career, becoming a full-time day trader is something that requires commitment, a good education, and plenty of practice. However, if you have the patience and the skillset, there’s nothing stopping you from making money this way. All you need to do is decide whether this is the path you want to take and create a plan for success.
Start by considering your goals and risks
The first thing you need to know is that a day trading career isn’t as easy as some people make it out to be. While it’s possible to be successful and earn a good living, it takes a while to become an expert in this arena.
The first couple of years spent building your skills are likely to be tough. There will be a lot of ups and downs that you’ll need to deal with, and you will need to prepare for the possibility of losing some cash initially. In this way, starting a day trading career is a lot like launching your own business. There are risks and benefits to consider. Start by asking yourself some of the following questions:
- Do you just want to quit your job? If you’re thinking of taking this path because you’re sick of your job, remember that you’ll need to spend a couple of years working on the side to maintain a full income. You shouldn’t quit anything immediately.
- Can you commit the time? Even before you leave your current career, you’ll need to find two or three hours every day to commit to watching the markets, buying, and selling. If you can’t do that, then you’re going to have a hard time making a living.
- Do you have the patience? For most people, becoming consistently profitable takes at least a year of practice. You’ll need to have the patience to work on your skills and unlock new opportunities over time.
- Do you have the right capital? In other words, do you have enough money to start experimenting? You should only risk money you can afford to lose at first.
Think about your market
Once you’re ready to start thinking more seriously about a DT career, you can begin to think about the amount of capital you’ll need. For instance, if you want to work with stocks in the US, then you’re going to need a minimum account of around $25,000. It’s often a good idea to add around $30,000 to your account so you have a basic buffer that will allow you to enter and exit stock positions in the same day.
If you’re exploring the Forex space, then you’ll need at least $500 to begin with. This obviously means that you can get started at a much lower entry point than you would with securities. However, it may be worth implementing around $5,000 or more if you want to produce a much bigger monthly income.
Finally, if you want to consider futures, you’ll need anywhere between $2,500 and $10,000, depending on the contracts you’re looking at. Make sure that you do your research on each market you want to get involved with in advance so you know if you have enough capital to make the initial leap.
Building your strategy
The most important thing you can do when you decide you want to trade for a living is to choose a strategy. You can’t just buy and sell assets on a whim. You’ll need to rehearse different plans and make sure that you can earn consistent wins with your assumptions.
One good way to begin is to watch live charts online. This will help you to get an insight into what measures you’d need to have in place to get into a purchase, and what would cause you to sell your assets. Think about how much you can afford to lose on any given purchase, and whether you’d be willing to take a decent amount of risk.
There are some places on the internet where you can learn about different strategies that some of the masters have used over the years. While learning about these things is helpful, make sure you don’t just copy what other people have done. Find your own strategy and test your assumptions by doing as much research as you can.
Practice before you spend
Finally, if you decide that you want to take the plunge and start trading for real, don’t rush into anything too quickly. Practice makes perfect in this landscape, and you’ll need to test your ideas in-depth before you start spending anything.
The good news is that you don’t need to put any of your capital at risk when you’re still a beginner. Many of the brokers in the current digital market will give you access to free demo accounts to use as much as you like. These accounts allow you to practice your strategy and see how decisions you might make would play out in the real world. Essentially, you’ll make fake purchases, and watch a stock move up or down from there. Practicing on these paper accounts is how many professionals keep their skills sharp and avoid jumping too quickly into new strategies.
Remember, you’ll probably find that no two trades are ever quite the same. One day might be more volatile than the next, for instance. However, regular practice will make it easier to see potential trends that could guide your hand in the future and help you to buy or sell with confidence. Every time you learn something new going forward, come back to your demo account and start practicing again. You’ll need a passion for constant learning to accomplish great things in this industry.