Should You Day Trade For Income
By Dale Gillham | Published 18 September 2018
I have been mentoring traders for around two decades and the most common statement I have heard, in that time, from those looking to learn to profit from the markets is, can you teach me to be a day trader.
Generally, when someone mentions this I ask them two questions. The first is, why do you want to be a day trader and the second question is, do you understand what a day trader is. The answer I get to the first question is always, I want to make money, and the answer to the second question is, 90 per cent of the time, no. If the majority of people do not know what a day trader is or does and they just want to make money, you have to wonder why so many desire to become one.
If you have ever googled trading or learning to trade, then it is highly likely that you have been bombarded with adds in your browser promoting how to get rich quick through trading and promises that day trading is the answer to everything. The majority of those promoting day trading are offering something for free to entice you to trade highly leveraged markets like Forex, binary options and crypto currencies, to name a few. If day trading highly leveraged markets for income is the answer, why does nearly everyone whose goes down this path fail.
In reality, the heavy promotions around day trading guarantees that a lot of money flows to those promoting this style of trading and not to those attempting to do it. But if it is so good and so easy, let me ask again why do so many fail?
What is a day trader?
Before I explain that, let’s look at what is a day trader? In simple terms, a day trader is someone who enters and exits a trade on the same day. Normally a day trader will spend the majority of their day watching the market and taking multiple trades during the day. This can range from just a few trades to dozens of trades in any one day.
When I ask those who desire to do day trade if they want to spend all day looking at a computer screen, the answer is always a resounding no no. They just want to make money. Their goal is to supplement or replace income.
Every now and then someone contacts me who has been day trading, and all are looking for a better way to make money. I say this because when I ask them to add up the amount of time they spend day trading, and divide this into how much profit they make from it, they realise they would get paid a better hourly rate working at McDonald's.
For those who are day trading and not making money, you have to ask who is making the money? As previously mentioned, it is the providers who promote these trading platforms and other services around day trading.
Day trading for income - why do so many fail?
Because the market is emotional and when money is involved emotions get heightened. Fear and greed increases and overtakes logic and reason, especially when the market is open. This leads to poor decision making and losses or inconsistent results. Further, the overwhelming majority of those attempting to day trade have very little education and experience and this only magnifies the emotions and poor decision making.
Would it surprise you to know that the most successful traders trade less and hold trades over longer periods. This practice, while profitable for the trader, is less desirable for the brokers and others in the industry. Less trading means less fees, which is also why day trading is so heavily promoted
I have written an article on how to become a full time trader, which is really what the majority wish for. In other words, their desire is to replace their income from trading.
To be successful in the market, however, you must trade well and not often. Does it really matter whether you place 10 to 30 trades a year or 30 trades per week? The simple answer is no! What really matters is that you make money consistently and you achieve your goals. To do that, you need the right knowledge and experience. While it is not something that will happen overnight, your journey will be worth it.
So what's happening in the market? Watch the video to find out.
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