Day Trading For A Living Basics
With Day Trading really started big when electronic trading started. The stocks in today's NASDAQ that trade by the decimal point used to trade by the fraction. The spreads used to be a lot bigger The advantage was to the large institutional and not the small trader. Until one SOES went into effect. Small traders found a loophole in the system and took advantage of it. Read more here = Small Order Execution System (SOES) http://ow.ly/2a8B307q5p1
Things do change in this life and slowly people are realizing and not listening to the grand folks anymore. Hey long term buy and hold just does not work and swing trading sucks and is stressful. Like the masses say day trading is gambling as they go off to their meaningless 9 to 5 working for someone else making someone else financially free and happy. let face it folks as a business owner and former worker for the man the only one the boss cares about is his own business and not yours are you are disposable. Well become your own boss with MOJO day trading.
Step 1 = paper trader for 90 days and get educated ion the MOJO University program
Step 2 - go live and make month every day is the plan.
Step 3 - become financially free
Characteristics of Professional Day Trading Professional day trading is not simply a hobby. Day trading requires a continuous effort on the part of the trader to improve their day trading skills while generating a profit and minimizing losses. There are only 20 day a month to make it happen. Professional day trading requires that the trader uses their own risk capital, which are funds that can be lost without causing financial hardship. Most of all, professional day trading requires that the trader has and use proven strategies that they continue to refine until a benchmark of consistent profits has been achieved as a result of their day trading activities. How this is accomplished is keeping by Journal and Record keeping.
Unlike an investor that may purchase a security and maintain possession of it for years, a day trader, or someone that engages in day trading, typically one day.
Day trading combines high leverage and short-term trading practices in order to capitalize on small movements in the price of stocks. While it may sound like day trading is strictly about turning a profit as quickly as possible, it also serves two important functions in the markets. Day trading activities are responsible for a large portion of market liquidity, and they help to keep the markets running smoothly with multiple buying and selling activities. Hence the orderly market.
Day Trading Example Let’s say Trader Andy, buys 1,000 shares at $3.90 and in 15 minutes the stock rises to $4.60, at which time Trader Andy decides to sell his 1,000 shares. If the price went up by $.50 or 50 cents, when Trader Andy sold his shares, he would make $500. However, you have to remember that Trader Andy has to pay commission for his trades, in this case that trade would have costed $5.00 in fees. That means, after commissions, Trader Andy has made $495.
Now compound that $500 2 times per day 240 days per year and you can potentially replace or exceed prior income.
Day Trading Software Just as in almost every profession, you will need certain tools of the trade in order to make sure you can be successful. I use Interactive Brokers which has the best software and fees in the industry. Here is a list of the types of day trading software you will need if you are planning on day trading for a living.
Broker = You cannot trade stocks without opening a brokerage account. Contact me for more information about the best brokers for you.
Stock Screener = If you think finding companies that fit specific variables is a simple task without the aid of day trading software is easy, think again. With nearly 3,000 companies listed on the New York Stock Exchange alone, manually conducting a search for the company that fits within your strategy is nearly impossible. This is why you need a stock screener. I use Trade Ideas and for more information contact me for special MOJO rates.
Charting Software = you will want day trading software that will allow you to generate custom charts based on metrics that fall in line with your day trading strategy. This is when you are going to need a quality charting software. You will want to find a charting software that is fast, reliable and allows you to customize your search criteria so you can narrow down your possibilities.
News Provider = There are few elements that can make stocks move as much as a breaking news story. To understand why a stock is moving on your stock screener, you will want to check a reliable news provider, a day trading software that is a must, to see if there are any major events or catalysts causing the movement. While day trading, this could be a major clue for you as to what stocks you should start your day with.
Whatever day trading software you decided to go with, make sure it has the following features: • Portfolio Tracker • Real-time News • Level II (which provides you with a list of all the buy and sell orders currently on the market) • Built In Order Entry • Time and Sales
These features are the bare-minimum your day trading software should provide you with.
Day Trading for a Living When people start day trading for a living, they usually fall into one of two categories: the individual that is working alone, or the individual that is working for a large corporation or institution. You will find that most people doing day trading for a living work for larger institutions because of the assets that are provided are ones that most individual day traders can only dream about. Now smaller retail traders can see hey are the minority and have a tough battle each day.
Large amounts of leverage and capital, high-end day trading software, direct link to dealing desks, these are some assets that would be practically impossible for the individual day trader to achieve on their own. Additionally, day traders that work for institutions usually have access to resources that enable them to capitalize on trades long before the individual day trader has a chance to react.
There have been many people that have experienced enough success at day trading to quit their normal jobs and pursue day trading for a living. If you are considering such a move yourself, it would be in your best interest to make sure you know what you are getting into. I am not saying that you shouldn’t consider day trading for a living, I simply mean that day trading is not something you just jump into without being prepared. Here are some tips that will help you make the transition to full-time day trader a lot easier.
Experience = One thing that will be very helpful at being successful day trading is experience. While you can read every book that has been published on the subject, create a digital library filled with articles that cover successful strategies, and watch every how-to video you can find, you can still get hammered by the markets. One of the best ways to ensure that you will have more positive results is by having experience with the markets. It is highly recommended that you create an online trading account and start playing the markets. The best is by using a simulator and paper trading to prove your consistent and your trading methods are working.
Even if things don’t work out for you, you will have the experience and knowledge of what you did wrong, why it was wrong, and how to do it correctly before you start day trading for a living.
Education & Training = This kind of goes hand-in-hand with experience. Yes, there is a difference between learning about a topic and actually doing something, completing some training before you dive head-first in the world of a full-time day trader will at least give you something to fall back on while you are fine-tuning your strategies.
Be Consistent = One factor that you will have to possess if you plan on making day trading your new occupation is that you have to be consistent. Here are some examples featuring day Trader Andy.
Example B1: Trader Andy has been day trading for 12 months. During the first four months, he did really well, averaging $5,000 each month. In the fifth month, Andy was excited that he was able to make just over $60,000. However, during the sixth month and rest of year he averaged around $1,800 per month. Example B2:
Andy has been day trading for 12 months. During the year, he averaged $5,500 per month. While he see others traders making $10,000 or more, Andy is content with his consistent performance.
From these two examples, which would you say is the best scenario? If you said example B2, then you are right. All of us would love to say we brought home $10,000 or more during the month, however, consistency, such as that demonstrated in example B2, should be the goal of anyone that is day trading for a living. This consistency means that you have learned the markets you are operating in and know how to read them. Under-promise and Over-deliver as they say.
You should also take a look at these steps before jumping headfirst in day trading for a living. Here are 10 steps for you to take that will help you to determine if this is the right move for you.
1. Conduct a thorough and honest self-evaluation. There are certain traits you should possess if you want to be successful at day trading stocks. It is not simply a commitment to a new career, it is also a commitment to a new lifestyle. While it may appear that day trading for a living is a life of ease, it actually requires a great deal of effort on your part. • Very little time off in the beginning of your career• Commitment to the daily activities required of a day trader• Continually learning and improving your strategies• Long hours in the beginning of your career• Being able to motivate yourself on a daily basis• Solid risk-taking abilities and bankroll management
2. Financial arrangements to ensure you are covered. Another aspect about full-time day trading is your finances, both personal finances and your finances for trading. Once you fill it is time to leave your current job and start day trading for a living, you will no longer have that steady income in the beginning of your career. With that being said, you will need to make sure that you have enough money set aside to cover your expenses. How much you should save has been debated by many financial experts. The safe minimum, however, is at least six to twelve months worth of expenses.
Having such a savings serves two purposes. One of the obvious reasons is because, without your income from your old job, you will have to have something to fall back on until you have started generating an income from day trading for a living. The other purpose for having this savings is that you will be more apt to make smarter trading decisions when you don’t have to worry about whether or not you are going to have electricity in the morning.
One more point about finances before we move on. Keep the money you have saved for expenses and the money you have saved for trading separate. The reasoning behind this is pretty simple. You don’t want to short yourself when it comes to paying for your expenses because you used your money to buy stocks. On the flip-side, you don’t want to find yourself unable to purchase the desired stock because you didn’t have enough saved to pay your bills. Keeping these two accounts separated will help to prevent such a situation from arising and will enable you to make decisions that are not emotionally charged.
3. Knowledge of how the markets operate and how they react to catalysts. To be successful at day trading for a living, you have to have some knowledge of how the markets work and how they are affected by economic, national, and international events. But it also requires less-complex knowledge, such as knowing what hours the markets are open and what holidays are they closed on.
4. You have to have a suitable day trading strategy that you have either created, selected, or modified. Most individuals in the day trading industry make their biggest mistakes during their first 12 months. Why? Mainly due to unstable strategies. To start, you should have at least two proven day trading strategies. They serve as a backup for each other in the event one strategy should happen to not work as you planned, or that there were no trading opportunities made available on a specific trading day. After you have gained some experience with your day trading skills, you can add more strategies that are more complex, but potentially more rewarding. Any strategy must be based on positive expectancy and to learn this you need to take the next class of MOJO University. The basis of the system!!
5. Knowing the stocks to trade. You have to know what stocks to trade. Red, green, up, down, sideways... You have to know the characteristics of the stocks and their trading requirements if you want to achieve success at day trading for a living. Without understanding these different requirements and characteristics, you could be leading down a path of excessive losses.
6. Practice good money management. Using good money management practices will help you to address the challenges that come with day trading for a living with stocks. It will also help your chances of being profitable even if only a portion of your daily trades present you with gains.
7. Test historical data. After you have developed your day trading strategies or found the strategies you think work best for you, use a test account to see how effective they are without having to risk real money. Most online brokerages offer such services for day trading purposes. You can also back test historical data with your planned strategy. Just make sure you account for costs and fees associated with day trading in order to have a realistic assessment. Keep a journal and day trade log every day to help your trading.
8. Do not forget to account for fees and charges related to your trading activities. Day trading typically involves a great deal of activity throughout a normal trading day when you are day trading for a living. This will quickly build up to substantial brokerage costs. Make sure you conduct research on all of the brokerages and compare what fees they charge for conducting trades. Each brokerage offers something unique for their users, so look around and chose wisely.
9. Integrate your trading strategy into a larger trader plan. While having proven strategies is a component of successful day trading, they cannot do it as a solo component. Here is some consideration that is needed to complement your strategies in order to develop a trading plan for your day trading activities.
• How much money will be used per trade • What is the entry and exit strategy • How much capital will be used • What will the frequency be for placing trades
As you can see, your day trading plan is basically just an outline on how you will conduct business when you are day trading for a living. It incorporates your strategies, what you will trade, what is your risk limit per trade, etc., and places it all together into your trading plan for your day trading activities. If you are planning on making a real effort in day trading for a living, you will have to develop a solid day trading plan.
10. Don’t start off too large. Regardless of how much money you have sat aside for your day trading efforts, start off small, especially when initiating your new strategies. Paper trading first is essential before going live. Using smaller amounts will help to avoid large losses if your strategies don’t work out as well as you thought they would. There will be plenty of time for going large once you have found the strategies that work best for you.
Day Trading Salary It is not unusual for the beginner day trader to make less than $50,000 during their first year in the industry. However, the current average is above $100,000 per year, about $103,000.
The state from which the day trading takes place will also have an impact on the average day trading salary. In New York, the average day trading salary is in the neighborhood of $120,000 and in Connecticut, the average is $112,000. However, when you look at Texas with an average day trading salary of $98,000 and Florida at $99,000, you can see just how much of an impact your area will have on the average day trading salary.
How to Learn Day Trading
While having experience in day trading helps, you can still learn day trading and do day trading for a living. Whether you are wanting to learn day trading to start a new career, looking for a way to make extra money, or simply interested in the industry, you have to approach it as you would with any other subject you want to learn. It will take a commitment of time, research, and work with different strategies until you find the one that works best for you if your goal is to learn day trading. If you are completely new the world of stocks, here is some recommended topics you should research if you want to learn day trading:
• What are stocks? • How do stocks work? • What is a ticker symbol? • What is the New York Stock Exchange and how does it differ from NASDAQ? • What are commissions and margins? • What is a market or versus a limit order? • How does trading with margin work?
There are plenty of other topics involving day trading and doing day trading for a living that you can research in order to help you learn day trading. Keep researching, reading, and learning so that way you have an understanding of the aspects of trading.
While it is true that many day traders have experience in the markets and college degrees, that does not mean you have to have these in order to learn day trading. In fact, there is currently no educational or experience requirements needed to be an individual day trader. The only thing you need besides operating capital, time, and an understanding of how stocks is effective strategies. You can get that in MOJO University!
See here ProTrader Alan 510 - 2 year Win Streak comment in the chat room today
Entry and Exit Strategies = Scaling in and out trades is key and the basis of the MOJO Day Trading style. Learn it before its too late.
Scalping Strategies = The scalping strategy involves immediately selling a security as soon as it becomes profitable and is one of the most popular strategies used in day trading.
By using day trading software, a day trader will sell the security as soon as the price of the security increases to a point it returns a profit. This strategy requires the use of good day trading software to ensure this moment is not missed. I use the DAS Trader Pro Software - www.dastrader.com
Momentum Strategies = This strategy is based on news releases and/or strong trending moves that are supported by high volume.
Daily Pivots Strategies = Daily Pivots involves profiting from the daily volatility of a stock. A using their day trading software, a day trader will attempt to buy the stock at the lowest dip of the day and then sell it at its peak.
Day Trading: Industry Lingo & Terms Every industry has its own unique lingo that may seem like a foreign language if you are not familiar with it and day trading is no exception. Here are some examples of lingo that is commonly used in the day trading industry that could leave you scratching your head. Along with learning day trading, if you want to do day trading for a living, you will also have to get accustomed to this unique lingo and its meaning.
Pattern Day Trader = A pattern day trader is someone that possess an account of at least $25,000 and conducts four or more trades within five days and is greater than six percent of their total trades.
Fibonacci Series = It sounds fancy but the Fibonacci series is nothing more than a list of numbers with each number being the sum of the two previous numbers.
Relative Strength Index = This is the average number of upward price movements for a specified period that is divided by the average number of the opposite, downward price movements. Higher RSI indicates that there are more people interested in buying rather than selling the specified security.
Commodity Channel Index = The Commodity Channel Index is used to identify the turns in seasonal agricultural commodities and other securities that experience a change in the levels of supply and demand during the year.
Bollinger Bands = This is a trading limit established below and above the moving range of a security within a 20-day period. Day traders buy when the price falls to the bottom and sell when the price is near the top band.
Modified Dietz = Modified Dietz is a method used to gauge your performance. While it is not the most accurate, it is one of the most simple methods
Day Trading Necessities:
Computer = A computer is probably the main component to setting up your area for day trading. Today’s computers provide plenty of power for day trading activities and day trading software, but you will want to ensure it has a good monitor. And while you’re at it, get an additional monitor so that way you will have plenty of viewing area. Day trading is going to require you to spend a lot of time reviewing charts and data that your day trading software will generate so you do not want to have to keep closing or minimizing windows when jumping around your screen. Just keep in mind that, depending on the day trading software you decide to use, you may need a computer with very fast updating capabilities. Refer to the section “Day Trading Software” for a better explanation.
Internet Access = Do not be cheap and subscribe for the slower internet package. Taking forever to update your charts and websites can lead to missing out on the best time to buy or sell a security and will not let you utilize the full benefits of your day trading software. Pay the extra monthly service fee for the fastest internet connection your provider has to offer if you are serious about being successful at day trading. Brokerage Account = There are many online brokerage services available online for conducting day trading activities and many have their own day trading software you can use with your subscription. If you are having a tough time deciding which one is best for you, conduct a search for brokerage reviews. There are plenty of sites dedicated to providing unbiased reviews of brokerage sites, day trading sites, and day trading software. Another great way to see which site would be a good candidate is by checking reviews from previous or current customers.
Spreadsheet Software = Along with your day trading software, having a spreadsheet software is essential for tracking the performance of securities and analyzing returns to gauge how your day trading efforts are paying off. While most online brokerages offer such services with your subscription, it’s not a bad idea to have your own independent spreadsheet software to compliment your day trading software.