The answer is an absolute yes. You can live off day trading. However, living off day trading will not be easy, as it requires complete dedication, discipline, and patience. You will also need to create a day trading strategy and have a solid plan in place to ensure you earn enough income.
Day Trading Tips and Strategies for Success
Even so, you can use the following tips and strategies to live off day trading:
Educate Yourself First
We cannot overemphasize the importance of learning as much as you can about day trading. Take an online course on day trading, find educational videos on YouTube, or take a part-time class. Before you start buying and selling stocks, forex, or commodities as a day trader, ensure to study the different markets and understand what makes their values rise and fall.
Create a day trading strategy and stick to it
You are most likely to make rational decisions before you place your day trades. Unfortunately, most day trading mistakes are made during trades. That is why it always makes sense to create a trading strategy and have a plan before starting to trade.
A trading plan makes it easy to approach and execute your trading strategy and system you have created based on market outlook, technical analysis, and risk assessment studies.
Practice, practice, practice
Let practicing be your mantra when it comes to day trading. Having a good trading plan is not enough. You need to be able to test your plan until you become good at executing it. The good news is that most stock, forex, and binary brokers offer demo accounts and virtual funds you can use to practice and test your trading plans beforehand.
Monitor and review your trading statistics
It pays to improve your skills and strategy quickly when it comes to day trading. The longer you stay without making good money, the lower your chances of living off day trading. That is why we recommend keeping a trading journal to monitor your statistics.
You can use analytics tools to analyze, review, and learn from where you make losses and profits.
By tracking your performance, you will be able to spot success and failure patterns. In this way, you can eliminate poor trades and replace them with those likely to return a profit.
Money management can make a huge difference
Managing your money correctly is the critical element to profitability when it comes to day trading. You must make cautious use of stop-loss orders, budgeting, and overall strategies that can help you manage your money in the right way.
Dedicate your time and attention to day trading
Treat day trading like a business instead of a side hustle, hobby, or part-time job. It requires your full attention and time, so give you all to day trading. In the beginning, you might have to set aside most of your day to learn and practice trading.
If you have limited time during the day, don’t consider day trading. You would be better off hiring a broker to work on your behalf. Day trading requires you to identify opportunities, monitor markets, and be aware of market movements.
Start gradually
As a novice day trader, you should start small, keeping your stocks to a maximum of one or two per session. Finding and monitoring opportunities is easier that way. You can also trade fractional shares and low-value stocks to limit risk and boost morale.
Learn to manage risk
Having a risk management plan can help avoid both small and catastrophic mistakes in day trading. It is all about minimizing the amount you could lose and your potential downside if things go wrong.
Set a budget for day trading
With research, you will be able to assess and set a budget you are willing to commit to each day’s trade. Most professional day traders commit 1-2% of their bankrolls to each trade. If your bankroll balance reads $50,000 and you are willing to commit 1% of that to each trade, then you can lose only $500 per trade. Successful day trades set an extra amount of money they can trade with. More importantly, it would help if you traded with money you are willing to spend and can afford to lose.
Don’t quit your 9-5 job yet
Even if you are experiencing a hot winning streak at first, you shouldn’t quit your day job right away. Markets can be unpredictable, and you need something to go back to if things do work with day trading. Once you have achieved consistent profitability, then you can quit your 9-5 job to concentrate fully on day trading.
Can a day trader make millions?
A day trader can rarely make millions. Unless you plan your day trading income into other high-yielding investments like real estate or start a business, you are not likely to make millions with day trading. After all, most day traders make, on average, between $500 and $3,000.
Can you live off of buying and selling stocks?
Yes, you can live off of buying and selling stocks. Although trading on the stock market is often seen as having a high entry barrier, you can make a living with enough patience, strategy, and ambition.
You can live off stock trading as part-time trade, full-time day trader, or as a way of earning supplemental income.
Can you make 20% a day trading?
Yes, you can make a 20% return a day trading with a modest win rate. To do so, you need to place around 1% of your trading account balance on each trade, execute 2-4 trades each day, and focus on markets with a good reward-to-risk ratio. However, the more capital you accumulate, the more difficult it will become to sustain higher returns of 20%. You can easily make more than $56 per hour or $3,000 per day trading stocks, especially if you apply advanced trading strategies.
How much can you realistically make day trading?
You can realistically make between $500 and $ 3,000-day trading. Across the United States, the average annual income of a day trader is $150,000, with most day traders making between $37,500 and $100,000. Career analysts and employees who day trade remotely or under an umbrella company can expect to make more or less, depending on the performance of the firm.
Note that you can make lower or way higher money day trading, depending on several factors that include:
- Time of trading: Most day trading approaches, systems, and strategies take years to work and develop. In saying so, the most experienced day traders usually earn much more money than $3,000 per day. Successful day trading take time, but skill, expertise, and market conditions can make a huge difference.
- The amount of capital you have: a day trader who starts with a capital of $50,000 is going to make more money than someone who starts with $5,000.
- Markets where you trade: Stocks usually favor day traders with deep pockets, while forex and binary options are geared towards traders with limited capital.
What type of trading is most profitable?
Buying and selling blue-chip stocks is the most profitable type of trading.
Why do most day traders fail?
Most day traders fail because…
- They trade with a well-structured trading plan
- They don’t conduct proper market research
- They diversify their portfolios too quickly
- They try to make up for or chase losses
- They rely too much on trading software
- They fail to practice often
- They don’t understand how to leverage, risk-reward ratio, and strategic planning.
- They gain too much confidence after making a profit
- They let emotions cloud their judgment and impair their decision-making
How much does the average day trader make?
The average day trader in the US makes a little shy of $117,000 annually or around $56 per hour. A day trader can realistically make anywhere from $500 to $3,000 daily day-trading. The bottom ten percentile of day traders make roughly $68K each year, while the cream of the crop (top ten percentile) rake in well over $198K per year.
What percentage of day traders can make a living?
Multiple recent studies show that anywhere from 1% to 20% of day trades can make a living from their trading activities. The investigators also noted that successful day traders enjoy monthly return on their investment (ROI) of between 10% and 18%.
Unfortunately, the world of day trading is not a bed of roses for everyone. Some surveys and investigative studies seem to show that up to 97% end up losing money in the long haul. As if that isn’t gloomy enough, their findings show that only around 1% of day traders can actually eke out a living from day trading, leaving the rest in limbo.
Can you live off investing in stocks?
Although stock trading is often seen as a profession with a high entry barrier, you can still make a living from it. However, you need to be patient and highly ambitious. Trading and investing in stocks can be either a lucrative, full-time career path or a wonderful way to supplement your income.