Can You Really Make Money Day Trading Stocks?

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You don’t have to travel too far on the internet before you find someone claiming to have made a fortune trading the stock market, but is this actually possible for the average joe? You’d be forgiven for being skeptical about the plausibility of making it as a day trader, and for many people, it seems like a pipe dream that is out of reach for those that don’t come from a financial background; however, that simply isn’t true.

Trading for a living is an entirely viable method of making money online. With a bit of practice and carefully controlled exposure to the markets, just about anyone can turn their hand to trading and make a consistent and reliable income.

What the stats say about your chances

First, it’s important to address the somewhat pessimistic statistics before moving onto the more complex stuff. If you’ve already done your research on the industry, you will have almost certainly come across stats such as; “95% of traders lose money” or “only 3.5% of traders are successful.”

While there is little empirical evidence to back these statements up, they do seem to hold water when we look at the trading population as a whole. You see, most people try day trading without any real knowledge of the skills required to succeed. Moreover, the average trader tends to make the cardinal sin of overestimating their skills and underestimating the volatility and variance of the market.

The fact of the matter is that trading for a living is extremely difficult as you’re going to be competing with some of the biggest banks and financial investors in the world. That’s because trading the markets is, in many ways, a zero-sum game. In other words, for there to be a winner, there must be a loser.

This dog-eat-dog scenario does not allow much room for error, and as a result, if you want to succeed, you must study, hone your craft, seek guidance, and learn to master your emotions. It is certainly not impossible, but it does require a lot of hard work and dedication.

What skills do you need?

Day trading certainly isn’t for everyone. What might be considered a dream job for some might be a nightmare for others. It all depends on your appetite for risk and whether or not you have the emotional stability to deal with long losing streaks and unprofitable days/weeks/months. After all, there aren’t many jobs where you can go to work for a month and end up losing money. With that said, here are the main skills a day trader must have:

Research and analysis

Whether you want to become a master at scalping, position, or swing trading, you need to have the ability to conduct quality research and solid market analysis. Your job as a trader is to research all of the available information pertaining to one particular stock and use that information to accurately determine its potential effect on the market. 

The more apt you become at utilizing market information from charts, indicators, and patterns, the more successful you will be.

Patience and discipline

Every successful trader needs to have both patience and discipline in abundance. The reason for this is because day trading can actually be an incredibly boring job. You can sit in front of the screen searching for a trading opportunity for hours and still not find anything that is worth entering into. 

Most traders have a specific set of criteria that a stock must fall into if they are to be deemed worthy of a trade. However, the real test comes in when the markets run-flat and there is very little volatility to take advantage of. Sometimes, this leads people to see things that aren’t really there, and they enter a trade out of border on rather than proper training and well thought out logic. 

Remember, sometimes, the best trades are the ones you don’t make.

The ability to self motivate

Most day traders are self-employed, which means they do not have a boss or a strict schedule to adhere to. This is the true definition of a double-edged sword.

If you’re the kind of person that finds it easy to self-motivate and create a good routine for yourself, then you may have no issue adjusting to this new way of life. However, many people fall into bad habits, and the time between work and leisure starts to become a little bit murky. This can lead to a lot of stress and, more often than not, leads to poor trading results. 

Emotional control

The most important aspect of day trading for a living is being able to control your emotions. You must have the ability to step away from the screen when you feel as though you aren’t performing well and refrain from the temptation of chasing your losses. 

The problem is, most people feel uncomfortable walking away from their screen while at a loss. Instead of taking the rest of the day off and calming down, they relentlessly chase their losses and try to enter more trades in an attempt to recoup from their previously failed trades. This is a bad idea, as you will almost certainly lose your discipline and enter into sub-optimal trades that fall outside of your regular trading strategy.

It may sound trivial, but emotional investing is one of the leading causes of financial losses in the stock market. If you think this is something you might struggle with, it’s not a bad idea to stay well away from the charts. 

Finally, how much money can you realistically make?

Unfortunately, there is no hard and fast rule about how much money you will make as a day trader. In general, your earning potential boils down to three main aspects:

• Your starting capital
• Your skillset 
• Your patience, discipline, and emotional control

Each person is different, and there is no real way of knowing how well you will do until you get out there and give it a try for yourself. However, before you head out there and risk your capital, it’s highly advised that you open a demo account and paper trade with your strategies first. Good luck!