The answer to the question, “Can day trading become a career?” is absolutely, with one hundred percent certainty, yes.
However before you rush to quit your job to day trade, it’s important to consider a number of factors.
The first is how much experience you have in trading. Ideally, to make the jump from trading as a hobby to trading as a career, you should have been trading for a substantial amount of time. We would not advise making such a lifestyle change based off of a singular successful trade, for example!
You should also have good experience of different market situations, and should know how to trade successfully in these. Different market conditions require different strategies, so it’s important that you have knowledge of these.
Aside from trading experience considerations, you must also consider the effect changing from a hobbying trader to a career trader will have on your lifestyle and income. Your working hours will change, and your income may fluctuate based on the volatility of the markets so you must be able to support yourself whilst you find your feet.
Below we’ve listed the most important tips that will help you transition from a hobbying trader to a full time trader.
- Practice trading on something other than a demo account
If all your trading has so far been performed on a demo trading account, we strongly advise transitioning to a broker before attempting to build a full time career.
Demo trading accounts are great for gaining experience, as we’ve previously mentioned in our blog How to Get a Career as a Proprietary Trader.
However, real time trading environments are vastly different from those of demos. This is due to volatile market conditions, differing trade executions and of course risk management of the amount of funds at your disposal.
To transition to full-time trader you will need real time trading environment experience, which will also help you craft a successful trading strategy.
- Make yourself a trading space
As you dedicate more time to trading, it’s important to make an environment that allows you to focus solely on your trades.
Just like when setting up a remote workspace, this area should not be in a lounge, kitchen or bedroom, but instead should be an entirely separate closed off space dedicated to work.
A dedicated workspace not only allows you to focus entirely on your trades, it also prevents distraction and encourages you to leave at the end of the day. It’s important when starting out to learn how to walk away, rather than overtrading and burning out.
- Set a routine and stick to it
Once you begin to focus on turning your hobby into a career it can be very easy to lose sight of a work/life balance.
But without a routine, you risk burnout which could lead to you missing crucial moments of market movement. Ideally the best time to trade in high volatility is when the market overlaps.
Typically, times with the most activity to trade are during the London and Tokyo overlap in the early morning, and then after midday when the New York stock exchange overlaps London.
However depending on where you are located, your time zone may require you to stay up late, or wake up early, to trade at the best times.
This is where a routine can provide structure and organisation, enabling you to make better and consistent trades – one of the most important things to achieve as a trader.
Related Reading: The Different Types of Traders
- Set realistic goals
Setting pressurised goals in trading is ill advised because of the market’s unpredictability. It will not always be possible to make 10% of your trading account each week, for example.
When starting a trading career, it is better to set goals in a yearly period. This reduces the risk of getting stressed, which could decrease your concentration and force you to miss out on crucial trading opportunities.
If you felt that setting yourself weekly goals would work better for you, ensure that you assess the market beforehand and then align your goals with what is realistically achievable.
- Have a second source of income
Part of trading is making bad trades. This is where traders can learn the most and eventually use their experience to hone them into excellent traders.
However when you’re just starting out, bad trades could mean the difference between making your rent, or buying groceries.
For traders attempting to make a living from trading for the first time, it’s highly recommended to have the support of a stable secondary source of income.
Again, this removes pressure and stress from your shoulders, allowing you to focus on crafting your trading strategy and learning all you can.
A common perception for hobbying traders trying to make it full time is that they will be able to withdraw from their broker, so they won’t need a supporting secondary income. This is incorrect, as it won’t always be available nor practical so it’s best to not even entertain the idea.
If your trading doesn’t progress to making enough money to support yourself initially, don’t be dissuaded. Having to pick up a part-time job either in the beginning or later on in your trading career is not a sign of a failure. Many traders started out the same way until they were able to hone their skills enough to safely support themselves.
- Practice your trading strategy
Making the change from a full-time employee to a full-time trader will change the way that you trade.
It’s therefore essential that before you make the change, you test, tweak, and try your strategy as much as possible.
Quitting your job and then finding out that your strategy is a non-starter could put you in a precarious position.
- Learn how to manage risk
Another key element of full-time trading is knowing when to stop, when to close a trade, and sometimes, when to step away. The best trades are borne from logic, not emotion, and this can be a hard learning curve to adapt to for traders going full-time.
Whereas before on a demo account or practice scenario a trade borne from emotion may have worked, it is not likely to in a real time trading environment, and so a trader must learn good risk management strategies.
Another trap many transitioning traders make is that of overtrading. Some traders will automatically feel the highs of freedom and try to earn the same amount of money that they were earning at their full-time job. This is incredibly risky however, and not recommended.
Overtrading can lead to burnout, financial losses if you burn through your capital too quickly, and also false security. Some traders can become overconfident and fail to assess their risk, leading to detrimental effects down the road.
Learn when to take breaks, and learn how to get comfortable with losing. Embracing your losses and seeing them as learning opportunities will greatly help your trading career.
Don’t try to get revenge. Instead, write the trade in your trading journal, assess it, evaluate it, and learn what you can do better next time. Then, take a break and try again the next day.
- Never stop learning
If you are in a fortunate enough position to quit your full time job and dedicate your entire time to trading, you will have a lot of time on your hands in between market downtimes.
Additionally, if your strategy or routine involves only trading in set hours, you could find yourself with a lot of free time on your hands throughout the day.
This is not an opportunity to waste it.
Use whatever free time you have to learn about trading. Read trading blogs, books and journals and constantly stay curious. Assess your trades, review bad or successful trades, and evaluate what there is you still need to learn.
The very best traders are still learning and looking to finesse their trading strategy so that it produces the most optimal level of success.
We hope these tips will help you as you navigate the path from changing from full time employee to full time trader.
With the right amount of dedication it is possible to adapt to being a full time trader if you have previously enjoyed trading as a hobby across a significant period of time.
Proprietary trading firms can also be great places to begin a full time trading career. Often what dissuades many new traders from starting out is that they cannot raise the capital needed to begin trading.
With a proprietary trading firm like us at Alphachain Academy, there is no need to raise capital as you trade on behalf of our clients.
What’s more, a majority of proprietary trading firms like ours are always on the lookout for traders that have shown initiative and that have a genuine passion and interest in trading. In return, we can supply you with experienced mentoring, and the chance to learn from an entire trading floor of other successful traders and their ideas, as well as access to innovative training sessions and performance reviews.
Interested? Take a look at our global or algorithmic trading courses, or alternatively, take our trading challenge where you have the chance to receive a fully funded trading account.