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How To Day Trade For A Living

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Nearly every beginner trader aspires for the day he/she will trade full-time from anywhere in the world while living out their ultimate life.

There’s no need to sugar coat.

Full-time forex day trading is hard. Beyond the fantasy of trading from a hammock in Thailand is the painful process it takes to get there. If you EVER get to that level.

Is Day Trading For A Living Possible?

The answer is YES.

There are many people who day trade Forex for a living. They all have different capital brackets and all depends on how much they need to sustain themselves.

Living in a low expense city $2500 is enough to live on if you’re aiming an average lifestyle. To live in expensive cities such as NY, you’ll require a lot higher amount.

Trading for a living is possible. But you need to factor in a lot of things before switching to full time.

Things to consider before becoming a day trader

1: How long have you been trading?

Experience is essential. Being a trader for one month is very different from an experienced trader with two or more years.

Even if the one month trader is making profits.

Why?

Because the short span of experience doesn’t grant someone enough experience to withstand all market conditions.

Trade for at least a year and get consistent before quitting your day job. The longer the part-time experience, the better to assess your win rate and understand the different market cycles.

2: There are bad days and even bad days. 

Bad weeks are a possibility too. Trading isn’t all wins. Sometimes you’ll get into a losing streak and get bad days. It’s hard to get consecutive 6 weeks of loss if you’re a good trader – but it’s not impossible.

Know some months are slower than others. And your income will be lower in some months than others. Plan accordingly.

3: It’s very easy to go broke. 

Trading full time means that you have no other source of income. There’s no room to take reckless trades since the higher the losses, the more your income becomes stable.

If you get a streak of bad losses when your rent is almost near, chances are you’ll panic and start overtrading to recoup your money.

This is why day trading is better for experienced traders. Getting into day trading without a concrete plan leaves many traders broke.

Have you ever tried Robo Advisors?

At some point, you’ve probably realized day trading can be a nightmare. You need to be great at trading, have high concentration abilities and as if the capital isn’t enough, invest in a powerful computer. 

The great thing is that forex robots can give you great advice and trade on your behalf. Robo advisors are automated software hence they only work rationally. If the idea of day trading has begun to give you jitters, then maybe it’s time to give them a try.

Day Trading Setup

As a day trader, you’ll be competing against speed and precision. To ensure you get accurate market prices like professional traders, you must have a well-optimized day trading setup.

Some basic things you need to have include:

1: Fast internet speed.

The Internet alone isn’t enough. At least 4 Mbps is a great start and a speed of 0.5 MB for downloads and upload rates. 

2: Computer

A basic laptop may work fine, but recommended specs for a trading computer should be at least 8 GB of RAM (16 GB is better) and 500 GB SSD. 

3: Graphics card

The graphics card is the one responsible for displaying images and information on your computer. The more powerful your graphics card is, the clearer the display. You want this to ensure there’s clarity when you’re opening positions

4: The screen

Some traders prefer to have several screens at their disposal while others prefer just one. The number of screens you need will depend on your preferences, but wider, bigger 4K+ screens will work best. 

More screens do not always equate to a higher success rate. But a sluggish computer will make you lose on great trades. It’s best to invest in a huge powerful computer than a slow low memory space as a day trader. 

Day Trading Rules

1: Set aside some amount to last you for a few months. 

You want to at least grow your capital without worry about where you’ll get money for rent or food. Anything can go wrong when trading so preparing some cushion money for the first few months is important.

2: Invest in money you can afford to lose. 

You’ve heard this everywhere: Trading carries a lot of risks so only trade money you can afford to lose. It happens that some traders borrow money on loan to invest. The greed to make money overlaps the rationality to know that they’ll lose money.

Every successful trader at some point lost money to Mr. Market. The difference is usually in how much money you lose and how quick you’re to learn.

So, borrowing the money you can’t afford to lose is akin to setting a death trap for yourself.

3: Concentration skills are a must

Day trading is different from swing trading since you’ll spend most of your time on the computer watching the trade setups unfold. Unlike in swing trading where you can watch them even once a day, day trading demands the ability to monitor screens for long hours without tiring.

4: Never chase a losing trade

It’s easier said than done, but it’s very sane advice if you’re to aiming to be profitable. Once a trade goes to loss, most traders open more trades with hopes of recouping the lost money.

But in doing so, rationality is distorted and hence the positions opened are wrong or low quality.

5: Keep a trading journal

Trading journals are important for all traders. Journaling all the trades you take as a day trader will help you keep track of the vital things such as what’s your average Risk: Reward, how many trades you take per day and what’s your success rate.

Journals also help you to monitor the strategies that work and even which time and currencies work best for you.

Best Indicators For Forex Day Trading

1: Moving Average

MAs are the most popular day trading indicators because they are simple to understand, quite effective and can be incorporated with most strategies. Day traders want to know the immediate trend and the long term one. 

Some of the effective EMAs are 8, 21, 50 and 200. EMA 8&21 show the short term price movement while EMA 50 is for midterm and EMA 200 for the long term.

Moving Average

2: RSI

RSI indicator shows when the price is overbought or oversold and at what values so that traders can open trades at the right time. 

While it’s not always effective, RSI is a great indicator. Ranges 20-70 are the standard. Once the price goes below RSI 20 it’s a sign that it’s oversold and buyers prepare to open positions.

Similarly, once the price goes over 70 it signals overbought hence sellers wait for signals to sell the currency.

RSI

Best Forex Day Trading Books

There’s a wide array of books to select from on the web. Below are some great reads for day traders. 

  1. “Day Trading & Swing Trading The Currency Market” by Kathy Lien. 
  2. “Range Trading” by Michael Y
  3. “The Disciplined Trader” by Mark Douglas
  4. How To Day Trade For A Living” by Andrew Aziz
  5. “Come Into My Trading Room” by Alex Elder
  6. “A Beginner’s Guide To Day Trading” by Toni Turner
  7. “All About Day Trading” by Jake Bernstein

Are you ready to become a full-time trader?

Do you think you’re ready to call yourself a full-time forex trader?

At one point every trader had to sit down and answer this tough question. Some eventually took the leap and dived right in. Others realized they aren’t actually ready. 

To answer that question:

  • Do you have enough money to cover you (and your family) for at least 6 months of your trading career?
  • Do you realize that there’s no regular paycheck and all you have is your trading account?
  • Are you a profitable trader? What’s your win rate? Is it AT LEAST 60%? 
  • Have you traded at least a full year to overcome the different market seasons?

You have to realize quitting your job to trade full time is a huge commitment and shouldn’t be done out of impulse. Depending on where you live, going to a job after a few years can render you unemployable. If you have a family, how are you going to sustain your family in the initial period? 

To lessen the effects, before taking that step, take some time occasionally to trade from home and see how it feels. Maybe you’ll get bored in less than a month due to the loneliness of not interacting with people frequently.

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