Day Trading – Can you really make a living on it?
Perhaps you have heard about day trading? I am sure you may have heard some of the stories of fortunes won and fortunes lost. There are a lot of interesting stories when it comes to this field. But really, can someone make a living off of day trading? Well many people today do just that.
Day trading means you are in and out of your trading position within the day or before the market closes. You would not hold a position over days waiting for longer moves, they like to be in the market and out again in minutes or hours.
It does take a dedicated person who can think dispassionately about the markets. Once someone has the experience they will be able to spot potential trends and make clear trading decisions.
When you are day trading stocks the best bet you are going to have is when you study and know all of the major companies in the market, which is near impossible. If and when new company information is released you should be ready for a trade to take advantage of that situation. For many day traders the most profitable stocks will be the most volatile stocks. If you can trade profitably when a stock goes up or when a stock goes down then you know you will be able to make a living but it’s not a simple as that. You need to have the right tools to trade and a good money management.
The reason why volatility matters when it comes to day trading is because you are trading off of the movements of any particular stock or stocks in the day. If a stock should only move up or down by 10 cents then you are probably not going to be making a whole lot of money off of that trade. This is of course assuming that you do not already have a net worth of many millions. When a stock moves up or down by several dollars a day then you know you can choose to trade that stock each day.
This also goes for those that are willing to get into the futures or foreign exchange markets. However, in this situation you are not trading stocks but rather buying and selling money futures. When you start to get into this type of trading the patterns and indicators are what you are looking at. You must also consider other economic factors like price of oil or other major commodities. This can and does affect the price of the money exchanged between countries. Just recently the currency in Iran was affected by their threats to close the shipping routes for all oil in the Middle East (2011 at time of writing). Keeping track of that type of news is what separates the true winners in day trading Forex or Commodities.
So ultimately can you realistically make a living off of day trading today? Absolutely you can! All you really need is a fast internet connection, a possibly dedicated trading console, solid money management rules and a good indicator like Range Bars. Along with nerves of steel a quality trading course with help educate you. Typically many day traders spend countless hours training for all types of scenarios to make sure they are prepared for any shift in the market trends. This is a really wise idea as the most experienced and wiser traders will be able to spot false moves leaving the mistakes for the less experienced traders. One method of day trading we use is Range Bars. If you read more on this site about Range Bars you will understand how they work and how they can help you become a better day trader.