Making Stock Trading a Full Time Job
Is it possible to turn stock trading and playing the markets into a full time job? Some people have earned several million dollars from successful day trading, so it’s definitely possible to make stock trading your full time career. Not everyone can succeed as a full-time, but if it’s your ideal career path, here are some tips for making it happen.
Be Prepared to Research
A career stock trader must spend a great deal of their time researching and analyzing the stock market. If you intend to make day trade decisions that are profitable enough to give you a reasonable salary, you’ll need to look at the entire stock market and monitor trends. Your goal with day trading is to buy stocks when they’re priced at their lowest for the day and sell them when they’re at their highest that same day. You need to be ready to make rapid decisions, all while strategizing over the short and long term.
A typical day trader might invest $7,000 in the morning and sell for $7,300 by afternoon. That’s a $300 total profit for the day and obviously could lead to a successful career in stock trading. Of course, you can also lose $300 or more in a day, too!
If you’re stock trading on a regular schedule (instead of day trading), you have more time to make decisions. You can find stocks that are priced low per share and wait until you see their price per share increase and sell them at a higher price.
Use Stock Trading Software
If you’re serious about stock trading as a career, you’ll want to get quality stock trading software to help you study the market statistics and make decisions. With software, you can make more informed decisions, rather than just guessing on your own. If you’re planning on making stock trading a career, you need to minimize your risks and give yourself all of the tools you can in order to succeed. You can’t make a living if you’re losing more than you’re making in the stock market.
So, in addition to using software to help you analyze and select stocks to buy and sell, you also need software or spreadsheets to help you measure your success. Are you losing more than you’re winning? Are you making a profit overall?
Can You Risk it?
Maybe you’ve had success stock trading in the past, sparking your interest in it as a career. The important thing to keep in mind is that there are no guarantees with the stock market. The money you invest could be here today and gone tomorrow – do you have the discipline to know when to stop investing? Do you have enough money saved to support you and your family, while attempting to make a steady income through stock trading?
5 Stock Trading Myths
If you’ve had any trading experience, you know it’s not all roses. Unfortunately, many people are so blinded by the potential that they fail to see the pitfalls traders can fall into if they aren’t careful. That’s why it’s important to be aware of common stock trading myths, some of which we’ve outlined below.
1. Top traders make triple-digit annual gains on a regular basis.
Reality: A very small (statistically insignificant) handful of traders might make 100+ precent gains year in and year out, but most full-time traders will do well to earn 50 percent returns on their account in any given year. They are able to live on this income, however, as most start out well-capitalized, often with $100,000 or more from the start.
The bigger the account balance, the less aggressive a trader needs to be to generate income. As the need for risk is reduced, the ability to make consistent income is enhanced.
2. Stock trading as a full-time career requires access to tons of data and access to high-end software.
Reality: The purveyors of expensive trading platforms and data sources have done an outstanding job of linking ‘more powerful tools’ to ‘trading success,’ but the truth is, trading success ultimately depends on the decisions you make outside of the software’s direction. Many highly successful traders have surprisingly limited software, as they feel it’s more of a distraction or a crutch than a tool.
3. The more you trade, the more you make.
Reality: Experienced traders will tell you that less is more. It’s better to wait for the few big payoff (and high-odds) opportunities that present themselves in a given year and ride them out fully, rather than waste time or capital on trades made out of boredom. Larry Williams said it best – “The longer I can stay in a trade, the more money I make.”
4. A proven trading system, or ‘black box’ approach, is the key.
Reality: If there really was a turn-key black box trading system that could be developed by software companies or charting services, they wouldn’t make it available to you – they’d keep it exclusively to themselves.
That said, adherence to a proven trading system (your own or another) is more likely to lead to stock trading success, sine this approach mandates consistency over time. The fly by the seat of your pants approach is another way of saying you’re wandering the market hoping to get lucky.
5. At least 2/3, and ideally ¾, of a trader’s trades will need to be profitable in order for the effort to be viable.
Reality: Even professional traders misfire, quite a bit, in fact. It wouldn’t be unusual for only 50 to 60 percent of a pro’s trades to be profitable. The key isn’t winning a lot. The key is winning big with at least a few of your winners, and never losing big with your losers. Defense is more important to net profits than offense.
Still want to be a professional trader? You don’t have to make an outright commitment of time and money to first get a feel for what trading is like in the real world. There are several ways to paper trade real-world situations, which risks no capital, but gives you an authentic experience. Just don’t quit your day job until you’ve proven to yourself you can make money as a trader.