Novice tradercommonly wonder whether it's possible to make a living trading stocks.Many people who independently trade for a living use day tradingstrategiesand studies have shown that the majority of day traders lose money over the long term.The idea that you could quit your job and support yourself just by trading stocks is fascinating. To some, itseems like an impossible fantasy, butit is possible to make a living trading stocks—the real question ishow ?
Following are the rules that a trader must follow in order to trading for living:-
1.Get Educated About Trading
Before you quit your day job, spend some serious timeeducating yourselfabout everything related to trading. You should be familiar with just about every type of trading that goes on in the markets, but as a day #traders, you should emphasize short-term strategies and the securities that work best with those strategies.Introductory books on strategies and theories will help you get acquainted with the playing field.
Once you understand the theories, products, and institutional players in the markets, spend some time testing your knowledge with a paper trading simulator.You can find best paper trading with chart inTrading view.You shouldn't make the leap into a full-time trading career until you've maintained profitability through a variety of market conditions on a trading simulator.
2.Set Aside Some Income
Whether you plan on day trading or not, you'll need a significant amount of capital just to get started as a professional trader.Many experienced traders suggest having at least one year’s worth of income set aside before you start. This is not the bankroll that you will trade with—you'll need separate capital for that. These funds should be set aside purely for living expenses such as housing, insurance, and food. Having this financial cushion will give you peace of mind, allowing you to begin your new career without the pressure of having to trade to “make the rent.”
Even when it comes to capital for your brokerage account,day traders need significant capitaltotrade.Day traders must maintain a brokerage account balance of $25,000-$35,000 if your trading full time as a Day trader. In addition,
you'll have to do your day trading in a margin account, although it isn't difficult for most traders to open this kind of brokerage account.
3. Trading Requires Discipline
Being able to successfully trade for a living means achieving a level offocus and disciplinemost people will never achieve,no matter what career they choose. This is as opposed to traditional investors, who buy relatively safe products and let their equity grow over decades.
Day traders who work from home may not have a "boss," but this isn't a good career choice for those who want flexible, low-key workdays. Day traders live and die bytheir trading schedulesand plans. They diligently take notes on their watchlist stocks at predetermined times throughout the day.
When a profit target on a trade is reached, a successful trader closes the position without hesitation or temptation to hold on in hopes of even more profit. On the other hand, when a trade turns bad, professional traders calmly cut their losses and close the position.
4.Choose a Good Trading Strategy
To get started trading, you'll need to develop a sound trading methodology(Strategies)thattakes advantage of volatilitywithout forgoingrisk managementprinciples.Build trading strategy that works for you according to your phycology and risk.And once you have established strategy thenthis methodology should be testedthrough back-testing softwareover months or years and in all different kinds of market environments.Best software for back-testing isAmibrokerfor PC.Start with a demo account, then ease your way into trading with real money. Slowly swap out simulated positions with actual, risk-taking positions.
5. Prepare Yourself Mentally
Professional traders need to leave emotion out of their trading. Psychologically, you will need to steel yourself for the severe financial losses that typically accompany the first few months of day trading.1The only way you can move past those losses is to approach them with calculating reason rather than #emotion. Learn from your mistakes without getting caught up in emotional highs and lows.
The goal when trading for a living is to have a reliable and consistent revenue stream, but that will take time, diligence, and luck to achieve. Not everyone has the mental fortitude to work up to the point where they have a consistently profitable strategy. Watching the daily fluctuations of your income can be extremely tough, especially when it's a sustained experience that lasts months.
The combination of speed, volatility, adrenaline, and losses can make day trading a jarring experience for newcomers. You'll need patience and coolheadedness in the face of repeated losses; otherwise, the stress of day trading canwreak on your emotional well-being.
Habeeb Mahmood
