The Benefits of Day Trading For a Living

by : James Pennington

Day trading and swing trading foreign exchange (forex), contracts for difference (CFDs), individual stocks or stock market indices, for many people is an attractive proposition. That is why there are numerous adverts for systems, seminars or training courses that promise earnings of thousands of dollars a day. Not only that, many claim that this can be done with a relatively small amount of capital and limited risk. If you ignore these adverts of guaranteed riches, do your own research and develop your own trading system, you to could benefit from the advantages of day trading and swing trading.

First of all, with day trading you are your own boss. There is no need to report to work and take orders from anyone else all for the benefit of regular salary. Of course, that does not mean you should not treat it as a business, nor neglect the discipline required to be successful at day trading. It is still vital to put the required time and effort in to planning, executing and reviewing every trade and decision in order that you can refine and improve your system as time goes by.

Being your own boss allows you to work where you want. You can choose to work from home, set up your own office or indeed work whilst travelling or on holiday. Working from home eliminates travelling costs meaning you don't need to earn the same amount as if you were going out to work. This is a great benefit but requires more discipline than if you set up an office elsewhere as tt is easier to get distracted elsewhere.

Travelling costs aside, set up costs are relatively small and pretty much all you need is an online trading account and internet access to be able to conduct business. If you are trading full time then it probably better to sign up for level 2 functionality which provides greater levels of analysis than an ordinary account plus the prices quoted are real time.

You can also trade when you want. Of course you need review your trading positions and the markets throughout the day but you do not necessarily need to be sat looking at a computer screen every minute of the day. The time spent watching the markets will depend on the system(s) you employ and the frequency of trading. Scalping or intraday trades will require regular review whilst swing trading, where you may place a trade every two or three days will require much less time sat at a computer.

At the very least, you can be more flexible with the hours you work as much of the research can be done at a time to suit you. Although it is important to be aware of key times during the trading day. For example, when a foreign market opens as movements there may impact the local market you are trading. Also the timing of any key announcements that day, be they of a macro-economic or company specific nature.

As mentioned, the initial investment is relatively small. A computer, a broadband connection, a trading account and possibly a subscription to a level 2 trading platform is all you need.

The level of funds required to trade is obviously a different story and a decent pot to get going is required. Many suggest a minimum pot of $50,000 is required, whilst others think it is possible to make enough gains to earn a living with a lower capital amount. What this is will depend on individual circumstances, whether you trade part-time or full-time and ultimately the success of your system.

Remember to ignore the promises of riches, develop and back test your own trading systems. Trade your system and refine as required. This way you too can start to benefit from the advantages of being a day trader.