Getting a Job as a Day Trader

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Getting a Job as a Day Trader

A day trader is a self-employed individual who attempts to make an income by buying and selling shares using his or her own money.

The stock market is a global entity (or mechanism) which allows individuals and companies to buy and sell part ownership of other companies and commodities. Whilst the trading floors of the London Stock Exchange and the New York Stock Exchange spring to mind when one thinks of financial trading, the “market” is actually an intangible whole which allows privateers to interact with the world of global financial supply and demand.

Although everyone invests in the market with the universal goal of making money, there are a variety of reasons why someone may choose to attempt this. A company may buy shares in a competitor to diminish the risk of a rival growing larger than itself. An individual investor may be unhappy to trust their money to a pensions firm which promises only very modest returns over the life of the investment. Or the individual may have enough capital at stake to effectively derive a living from the profits of trading daily margins; in effect, they become a professional day-trader.

Salary

Any organisation which allows individuals to invest money in the stock market has to run the following disclaimer, by regulation of the Financial Services Authority: “Investors should be aware that past performance is not necessarily a guide to the future and that the price of shares and other investments, and the income derived from them, may fall as well as rise and the amount realised may be less than the original sum invested.” Essentially, investment in the market is a form of gambling, although knowledge and research can help to tip the balance in the investor’s favour. Of course, the potential for profit and loss is wholly dependent on investment strategy and the amount invested over a given period of time; there is no salary as such.

Responsibilities

  • Understand the workings of the global financial markets
  • Watch and analyse the markets on a daily basis and formulate trading and investment strategies
  • Appoint a broker to carry out transactions
  • Accurately record and maintain records of shares under ownership
  • Complete year-end tax returns for Capital Gains Tax (CGT) liabilities

Qualifications

There are no formal qualifications required to become a day trader as it is an activity of self-employment. The trader will need to appoint a broker, however, and there are criteria that must be met in order to do this. Typically, to open a trading account with a stockbroker, the individual will need evidence of full-time residence of the country in which the broker is based, a domestic bank account, proof of address, proof of age (candidates must be 18 years old or above) and contract notes of ownership for any shares currently under ownership being moved to the new broker.

Opening an account is not difficult, but traders working with small investment values should be aware that the broker’s fees relative to the value of shares will be very high per transaction. For example, a trader buying £150 worth of stock may incur a £15 standard broker’s fee per trade, whereas a trader using £5000 of liquidity to finance each daily position will still only incur £15 per transaction.

Skills

  • Ability to make fast investment decisions based on price information, news and charts
  • Ability to formulate long-term liquidity strategies
  • Strong analytical skills to be able to read market data and consider alternative positions
  • Have an understanding of various mitigation activities when the market turns bad, such as “shorting” and “averaging down”
  • Access to supplementary finance in times where strategies are not delivering an income
  • Ability to engage in various channels of communication with other traders to “talk up” a failing stock

Working Conditions

Most of the work takes place at home, although improvements in today’s smartphones mean that traders can basically work from anywhere. Most brokers are contactable by phone, so the trader can view charts and place telephone instructions from a coffee shop or airport. It does not matter as the stock market is a truly global entity, and so a trader is able to buy and sell shares in companies that trade in markets outside their home country. This lends a nice feeling of being plugged in to the world market, and also forms part of the addictive excitement of trading stock.

It is a thrilling and inspiring job which can instil fear and unrivalled joy in equal measure depending on how the trading goes. In terms of proving an income to live off, it is not a job for the faint-hearted or the risk-averse.

Experience

It is possible to make large sums of money from stock market investing by relying on tips of other traders, or complete luck. However, it is generally assumed that investors learn as they trade over a number of years, learn from their mistakes and evolve their strategies as their strategic and analytical skills improve with time. The movements are often unpredictable though, which is why it is possible for very large financial trading organisations with decades of history to go bust from bad trading conditions, as was seen recently in 2008.

Career Progression

Traders often begin as hobbyists, putting a few hundred pounds into two or three stocks, and waiting for a year to see what happens. Most get bitten by the bug though, and start trading regularly. As portfolios grow in value and diversity and start to generate weekly profits, a lot of new investors start to toy with the idea of doing it full time. Some manage it successfully, whilst others hang on in there for a few months before returning to a less stressful and more reliable form of making money: a day job!

Employers

Traders are self-employed individuals who typically work from home. In this respect, there are no major employers as such.

Ollie Burt is an entrepreneur freelance day trader who plays the world markets from his home office in Leicestershire, England. His exceptional investment strategies inspire friends and colleagues to play the market too.

What made you decide or choose to get into this sort of career?

About five years ago, my father decided that he would sooner manage his own pension rather than trust the bankers and pension organisations, and he encouraged me to look at currency trading. I’ve been following the markets ever since, and now enjoy trading in currency and commodities.

Do you have a standard day or a standard type of `exercise’?

Yes, I check the news and do the same technical analysis of the markets every morning before trading. It’s important to first establish a technical and political overview of world sentiment before trying to put together an investment strategy.

What is the most common type of problem/call-out/enquiry to which you must attend?

Occasionally an important government official will say something that spooks the market and catches everyone by surprise, which can lead to some highly erratic price-action. You need to be able to adapt the strategy to overcome price wobbles, but also, to hold on when you feel a stock or currency has fundamental value and understand that short term price blips are exactly that.

What do you like most about the job?

Nothing is ever the same. Markets are always changing and evolving so mentally it is very stimulating. You really do feel like you are plugged into the epicentre of the global financial picture.

What do you like least about the job?

If you have a losing day then you have literally been to work for the day only to have less money than when you started, which can obviously be extremely frustrating. Also, if you are holding stock which is fundamentally sound but is being hammered by macro sentiment, then you can become frustrated with the short-sightedness of other traders. A general gloomy picture has a detrimental effect on every stock, so it’s a bit like throwing the baby out with the bath water.

What are the key responsibilities?

Trading is simply about taking risks, so managing those risks and keeping them sensible is the key to long term success. You don’t want to make £1000 one week just to lose £2000 the next.

What about academic requirements? Any formal demands, eg A Levels?

There aren’t any; qualifications are available but they are not essential because you are effectively self-employed.

What is the starting salary, and how does this increase over time with promotion?

There is no salary; if you are self-employed it comes down to two things: 1. How much capital do you have (£2000 is probably the minimum to realistically start from 2. How successful you are (the more trades you win the more money you make). Performance varies dramatically; some traders lose money whilst others make millions on similar holdings.

What advice do you have for someone who is looking to get into this as a career?

Experience is very important and you can never do too much research. Develop a strategy, back-test it to prove it works and then learn how to put it into practice and how to stick to your plan.

What are the most important qualities an applicant must and should possess?

Quite simply, the ability to keep your own head whilst everyone else around you is losing theirs.

Any closing questions, comments or additional advice?

Trading can be an emotional roller-coaster so take care. Never invest more than you are prepared to lose – that can be anything up to 100%. And never borrow money to finance a position, as you can end up with losses well above your ability to repay them. Stay sensible, have fun and don’t get (too) hooked!

How to Become a Day Trader

When some people think of successful day traders, they think of multimillionaires lounging in a beach town, making trades and relaxing. That reality is rare, and day trading isn’t as easy or lucrative as it might seem from the outside. Despite challenges, some people elect to day trade as a part-time job, or they take on day trading as their full-time gig. If you know your stuff and follow a strategy, you can make money over time through day trades.

If you’re interested in the idea but unsure of how to become a day trader, we’ll take you through the steps. We spoke with experts about the perks and perils of day trading, and they shared insights on how someone can break into the industry.

What is a day trader?

Before you can become a day trader, you need to know what a day trader is. In its most basic form, a day trader is someone who buys and sells securities within the same day. A day trader ends the day with zero open positions in the market.

For example, a day trader could buy stock in the morning and make trades throughout the day in hopes of profiting off daily fluctuations in stock price. At the end of the day, however, a day trader won’t own any shares.

This is different from a swing trader. A swing trader makes trades over multiple days in hopes of profiting off longer-term fluctuations in the stock market. Swing traders may sell some of their securities one day and buy more a few days later, but the idea is to allow more time for the investment to go through peaks and valleys while still owning it during that process. Normally, swing traders own securities for a few days or weeks. Day traders don’t do this, as they only own securities for a day, although both day traders and swing traders perform a type of short-term trading.

There are a few other key terms that day traders should know:

    Forex market – This term stands for the foreign exchange market. The forex market and stock market are two marketplaces where day traders commonly make trades.

Professional day trader – A professional day trader is someone who day trades for a living and is licensed to trade. If you’re looking to become a professional day trader and work for a brokerage firm or something similar, make sure it’s registered with the SEC.

Pattern day trader – According to the Financial Industry Regulatory Authority (FINRA), a pattern day trader is one who “day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than 6% of the customer’s total trading activity for that same five-day period.”

  • Margin trading – To fully understand what a pattern day trader is, it helps to understand margin trading. Margin trading is when traders use borrowed funds from a broker to trade. Due to the risk involved here, margin trading takes place through the use of a margin account. FINRA has specific requirements related to this for pattern day traders. The organization says, “Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades. The required minimum equity must be in the account prior to any day-trading activities. If the account falls below the $25,000 requirement, the pattern day trader will not be permitted to day trade until the account is restored to the $25,000 minimum equity level.”
  • 1. Perform a personal audit.

    If you want to pursue day trading, you need to understand the challenges. You’re going to have days when you lose money. It’s going to take a lot of time to understand what you’re doing. Even once you understand different strategies and all the terminology, you still might not find success. Day trading is hard, and there’s no guarantee you will make any money at all.

    “Becoming a day trader is something that a lot of people see as an easy way to make money where you don’t need much experience – just click a few buttons and hey presto, you’re rich! But nothing is further from the truth,” said Deeyana Angelo, a managing director at Blahtech and Market Stalkers. “Day trading is a very difficult performance discipline, much like becoming a professional football player or playing a musical instrument to a virtuoso level. You first need to have a natural talent, followed by years of practice.”

    According to Angelo, who has over a decade of experience with derivatives trading, day trading is a difficult task. She said it requires an analytical mind and that many people she’s seen succeed have backgrounds in industries that require years of schooling and practice. If you want to become a day trader to get rich overnight, you’re going to end up losing large amounts of money. It takes time and practice to become an effective day trader.

    That being said, there are day trading success stories. If you understand a marketplace and develop effective trading strategies, it’s possible to be a successful day trader.

    “Having trained multiple clients who’ve gone from cubicles with small trading accounts between $10,000 to $37,000 to successful, full-time day traders, making millions in just a few years, I have verified proof people can make the leap from their career to trading full time,” said Jason Bond, co-founder of Raging Bull, a trading, coaching and mentoring service. [Interested in accounting software to help you stay on top of your trading activities? Check out our best picks and reviews.]

    2. Research the market, strategies and potential platforms.

    Whether you’re going to use the forex market, the stock market or any other marketplace, you need to understand how that market works before becoming a day trader. There’s an idea that being a day trader can make you rich quickly and allow you to spend most of your time relaxing, but that couldn’t be further from the truth. Succeeding as a day trader takes significant research and effort.

    Researching the market and eventually developing strategies also requires learning from successful day traders.

    “The best way to become a day trader is to learn from existing profitable day traders,” Bond said. “There’s an overwhelming amount of theoretical material on the internet about how to day trade, but nothing beats learning from someone who is currently successful at it.”

    Your research should also include finding additional detail on trading strategies within that market and regulations surrounding day trading. FINRA’s website is a good place to answer any detailed regulation questions regarding day trading.

    We found a few trading strategies that are commonly recommended or used by experienced day traders:

      Breakout – A breakout strategy refers to a sizable fluctuation, or a breakout, on a stock price that has been relatively still for a prolonged time. For example, if a stock has been between $30 and $31 for three weeks and suddenly you notice it’s either dipping or rising dramatically, it might be a good time to trade. That volatility should be enticing to a day trader.

    Scalping – This is an easy strategy for beginners. Scalping means you sell your stock immediately after the trade becomes profitable. This isn’t too complex in terms of when to sell, so it’s an easy way to get your feet wet with day trading.

  • Momentum – Momentum trading is based off trending news and information. Whether it’s a new earnings report or different breaking news, day traders use news events to project rising and falling stocks. This requires a good bit of research to do well, but it’s still a good option for beginners.
  • There are many other strategies and nuances you can implement as you become more adept at day trading.

    In addition to understanding regulations and picking a strategy, it’s important to look for an online broker with detailed trading tools. Day trading requires a lot of quick decisions, so you don’t want to be hampered by lackluster online tools or a slow internet connection or any other tech issue. Depending on the online platform you use to trade, you may be subject to commissions on those trades. According to The Motley Fool, which used TD Ameritrade as an example, trading 30 times a day across 250 trading days would lead to over $50,000 in commissions in a year.

    Depending on the platform you use, you might need to earn thousands of dollars in profit to break even on your day trading. Research is tremendously important when selecting what platform you’re going to use to day trade. These are a few of the top day trading platforms we found in our research:

    Platforms vary, and there are plenty of other options that draw good reviews and have strong reputations. When selecting an online trading platform, it’s important to seek out customer reviews and find a well-respected company that aligns with your needs.

    “When I started day trading back in 1998, I was a total gunslinger, averaging 550 trades per day,” said Merlin Rothfeld, investment strategist and instructor at Online Trading Academy. “This caused me to be reckless in my trade selection and execution – not to mention that my broker was making a killing off the commissions I was paying on all those trades. Over the years, I have come to realize just how big an expense commissions are for the average day trader. For this reason, I recommend that every day trader set a maximum number of trades to take in a day. Think of it like having a six-shooter: You only have six bullets in your gun, so you better make them count. This helped me really focus on finding and executing the best trades each day.”

    3. Start small.

    Once you’ve completed sufficient research, it’s important to start small like Rothfeld suggested. It takes time to learn how to day trade, and putting a lot of money on the table to start is a big risk. The risk associated with day trading also means you should use money that you’re comfortable losing.

    “Day traders typically suffer severe financial losses in their first months of trading, and many never graduate to profit-making status,” the SEC’s website says. “Given these outcomes, it’s clear: day traders should only risk money they can afford to lose. They should never use money they will need for daily living expenses [or] retirement, take out a second mortgage, or use their student loan money for day trading.”

    Since losing money is part of the learning process for many day traders, it’s a good idea to start slowly and learn as you go. It’s also important to stick to whatever trading strategy you’re implementing. One of the biggest mistakes day traders make is creating a well-thought-out strategy only to completely go against it in a rushed trade.

    “Quite often, day traders will take trades because they are just sitting in front of their screen all day,” Rothfeld said. “A forced trade is generally going to be a losing trade. Always follow your rules.”

    Understand the risks and challenges of becoming a day trader.

    Day trading isn’t easy, and there are several areas of complexity that require research for new day traders. If you decided to become a day trader, it’s important to understand that day trading isn’t a get-rich-quick scheme. You will lose money along the way, and not all your trading strategies will pay off as you expect.

    To become a successful day trader, you need to be willing to put in months and years of hard work to understand the markets, develop a strategy and execute your plan consistently over time.

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    8 Ways To Trade Stocks With A Full Time Job

    Table of Contents

    Trading With a Full Time Job

    Most students who enter the Tim Sykes Trading Challenge are looking to make a change in their life and career and are trading with a full time job, however, some of them are currently working full time jobs, which can limit their time and energy for trading. At least in the beginning, it’s likely that they’ll need to juggle working full time with their new trading career as studying is FAR more important at the start than actually making trades…if you remember this great penny stock trader took 9 months before he became consistently profitable and that was just by studying and practicing every day…so it takes time to actually make enough income from trading to quit your job.

    This begs the question: how do you pursue trading with a full time job? How do you make time for trading and studying while maintaining a good work ethic at your day job? Here, I’ll offer some helpful tips that will help you navigate what can be a challenging time of transition.

    1. Know that it’s going to be challenging.

    I don’t want to discourage you by saying this, but it’s a simple fact that juggling working full or even part time and trying to be a day trader will be challenging. However, being prepared for this and making a game plan can really help.

    Remember: many of today’s successful traders formerly held full time jobs. You too can be a success story. Knowing that the short term difficulty can deliver positive long term results can be comforting.

    © 2020 Millionaire Media, LLC

    2. Focus on your goals.

    To help maintain motivation for trading with a fill time job, consider your ultimate goals. What is it that you hope to get out of trading? For many students in the Tim Sykes Million Challenge team, the most immediate goal is to change gears from their current career. Does that sound like you? Perhaps you’re working a dead-end job, or maybe you just want to try something different. Day trading can be the vehicle that helps you make change happen.

    But don’t just think about career goals. Think about your long term goals and what you really hope to gain from day trading. Do you want to buy a new house? Or maybe an island in the Caribbean? Considering these long terms goals can help give you the determination and energy required to start trading while maintaining a full time job.

    © 2020 Millionaire Media, LLC

    3. Get clever with time management.

    Trading with a full time job will require some creative time management. You’ll need to juggle commitments and make time for day trading. Waking up earlier, doing research on potential plays very early or very late, or working up potential trading strategies on Sundays are all just a few ways that you can make use of your free time so that you can maximize the minutes you have to trade during market hours. While many people will claim “I have no time,” it’s incredible how much the you can make if you cut out frivolous things like mindlessly watching TV or YouTube for hours at a time.

    4. Alter your work schedule.

    More and more, employers are open to offering flexible hours for employees. For instance, you may be able to work on weekends to free up more time for trading during the week. Alternately, you may be able to work out an agreement wherein you work four days a week for longer hours, or cut out lunch breaks so that you can leave early. Any time during trading hours that you can free up will help your career big time. Talk to your employer and see if any of these options might be available to you.

    5. Get organized.

    Since time will be at a premium as you embark on trading with a full time job, it’s important to get really organized. Being organized both at work and at home will reduce mental clutter and maximize free time, so that you can focus on trading.

    For example, if you have a family, you might consider establishing blocks of time that are reserved for you to focus on trading. During these times, your partner might be responsible for cooking, taking care of the kids, and so on. You can also consolidate errands and necessary tasks such as paying bills to certain times, so that your attention won’t be scattered. Anything that you can do to organize your life will give you more time and space for trading, and there’s real value in that.

    6. Just say no.

    It can be hard to say no. But to pursue trading with a full time job, you’re going to have to learn the power of no. Your time and mental energy is at a premium now, and you don’t want to overexert yourself or you’ll burn out, have a mental breakdown, or both.

    But this doesn’t mean that you have license to be a flake. When asked to do things that will take you away from your trading career, weigh the pros and cons. For instance, you may not be able to skip your sister’s wedding, but you could probably skip other events. Be clear and firm and say no rather than saying maybe and then flaking out later.

    © 2020 Millionaire Media, LLC

    7. Remember: it’s not forever.

    I won’t lie: maintaining this double lifestyle as a full time employee and a trader is not going to be easy. However, it can be helpful to remember that this is a temporary situation. As you get more established as a trader, you may be able to cut down to part time or even quit your job entirely. You might have some tired days and long nights, but remember your goals and what you’re working for. You’ve got this, and it’s worth it.

    8. Be consistent.

    Of course, none of these tips will be very effective if you’re not consistent. Trading rewards consistency and practice. Keep this post bookmarked to refer back to if needed. With time and consistency, following these tips can help you make things happen while trading with a full time job.

    Establishing yourself as a day trader while maintaining a full time job isn’t necessarily easy. However, for many new traders, it’s the only option. Keep following these tips and stick with it, and in time, you will begin to see positive results.

    How do you make time for trading? Leave a comment below and let’s give each other suggestions to help each other do better!

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