Money lending and trading are things that have been going on for hundreds of years. Whenever we hear after reading, we automatically remember all of those stories and such that used to involve someone who was giving and taking money from people. 💲
Nowadays, we have a more modern term for it, that is, a day trader. Day traders are people who profit off of working as money lenders and traders in the day 💱. They can earn up to $116,895 per year in their profession.
Becoming a day trader can be a complex process. You will have to start by understanding the very basic requirements of the job 🧑💼. This article has done just that, and if you are interested in this profession, please read along so that you will understand more about the job.
Question and Answer
Everyone feels a bit confused and doubtful before choosing the right career for themselves. So, any doubt you might have about becoming a day trader will be resolved in this section.
I have given a few questions below. Answer these as honestly as you can.
- Am I ready to learn continuously?
- Do I have risk tolerance?
- Am I good at risk management and damage control?
- Do I have a trading plan?
- Have I practiced through simulated day trading?
Step 1: Knowledge
Who is a Day Trader?
Now, let’s start with understanding the very definition and work of a day trader. We all know about the stock market and how the prices of almost everything fluctuate regularly.
Sometimes, the prices of a certain something are at an all-time high 📈while other times, it is very low 📉.
Day traders are people who take advantage of such market inefficiencies to see a deal that is going to be more profitable for them. 🤑 One trading day has a lot of certain market inefficiencies, which helps them close a very good deal just before the trading day ends.
To do so, they have to utilize a lot of their techniques as well as strategies so that they can make sure that they get the best deal ever.
We have to be quick, fast, and smart 🧠 about it because these deals are relatively short-lived, and they might not get the same chance even the very next day.
Types of Day Traders
There are different types of day traders right now in the business. This is because the market requires different methods of handling it. Day traders differ because of the methods they use to make deals and trade 🤝. The most well-known and top ones are listed below.
Who they are: Analysts who secure advantages of price inconsistencies.
What they do: As an arbitrage intraday trader, you can become an exchange arbitrageur who doesn’t operate using technology 💻 but cash 💸.
Who they are: News flow traders are traders who choose to understand the news and information about stuff like impact prices, bonus issues, orders, and more.
What they do: They understand and analyze the momentum in the stock market with the help of news 📰. Since this is seen as a more logical and factual way of doing trade, a lot of day traders nowadays opt to become news flow traders in comparison to any of the other types.
Who they are: Sharpshooters are traders who take on high risks and bet on the direction of the stock.
What they do: These people try to deduce something from the recent movement of profit 📈in the stock market and then make a bet using that information.
Who they are: Noise traders 🔊 are people who decide to make short-term trades to profit from various trends in the market.
What they do: To put it simply, these people don’t focus on anything other than the main economic trend in the market at a certain moment in time.
Who they are: The scalpers are people who try to get small returns from the market in one day of business and end up making a lot of money 🤑 in the process.
What they do: These people have very specific skills, and they operate by using good capital support.
Roles and Responsibility
There are certain rules and regulations as well as responsibilities that a Day Trader has to take care of.
Ethical Trade Execution
- What they do: They have to buy and sell products at the right time and have to carry out trade in an ethical manner.
- Why: Efficient and ethical decision-making will help them get the most beneficial deal.
Trading Plan Development
- What they do: They have to make a proper trading plan that includes all their plans and strategies.
- Why: This plan helps them stay organized and keep track of deadlines.
- What they do: They have to keep proper records of all their trades and report their earnings to the authorities.
- Why: Managing tax obligations is an important legal responsibility.
Expert Skill Sets to be a Day Trader
Day Traders need to be good at the following skills in order to be successful.
- Market Knowledge – Proper knowledge about the stock market will help you understand the trends in the market better and make beneficial decisions.
- Emotional control – You have to make good decisions for investing money and not make any hasty ones.
- Pattern recognition – This skill will be useful for analyzing and recognizing patterns of investment in the stock market.
- Record keeping – You will have to keep proper records of every transaction and investment for future use.
How much can a Day Trader expert earn?
The earnings of a day trader can depend upon a lot of factors. You can get paid more because you closed a very good deal or because your client has decided so because of your skills and experience.
Your pay rate can fluctuate 📊 a lot. But you can still get a very beneficial salary just because of the amount of demand for these people in the market nowadays.
On average, a day trader in the United States, as of August 2023, earns up to $116,895 per year. This is a number that has been confirmed after taking the survey of a lot of professionals in this field and is up to date.
But since I talked about fluctuation, you can also refer to a range to understand what your salary may look like even after the fluctuations. An average day trader can earn from $68,000 to $198,000 per year. This is still a good amount. 👌
If we are to look at hourly wages, an average day trader earns about $56 per hour.
This was all about the salary, and now, we will discuss how you can enhance your CV so that you get a good paycheck 💵.
Scope of Day Trader
While day trading is a very beneficial job for those who are able to understand the stock patterns and invest properly, it can be very risky as well.
According to stats published by Finmasters, a study established that only 36% of US-based day traders are able to make proper profits in the duration of their investment. However, this doesn’t mean that the number of day traders has gone down at all.
A lot of young traders are stepping into the market, and more studies tell us that Bitcoin is the most preferred trading instrument in the market right now.
Step 2: Skill
Top Global Programs
Now, it’s time to look at some schooling options for you if you want to become a day trader. I have searched for and put together a list of the top trading schools in the world.
These schools are the best when it comes to degrees and training programs related to the basics and methods of trading. 🔽
What it provides: It doesn’t have accounting or business in its list of programs offered, but the economics program here is top-notch.
What you will learn: The alumni network is very active and stretches far and wide. There is also going to be a statistics program launching soon.
What it provides: The Massachusetts Institute of Technology has the Sloan School of Business, which offers the programs required for one to become a day trader.
What you will learn: You can take on a single-year finance program, which includes topics such as corporate accounting and finance theory.
These are theoretical guides 📝that are going to teach you the theory first and then use this knowledge on projects you can do with others. You utilize all you have learned in these projects.
What it provides: The Columbia Business School Master of Science in Financial Engineering is operated by Columbia University. The acceptance rate here is about 6%.
What you will learn: Columbia University offers a financial engineering program that can help you understand more about computational finance/ trading systems, finance and economics, and asset management. 💲
What it provides: This program is a professional master’s program that has courses that are going to teach you about practical applications in this field. You are going to be mentored by finance professionals.
What you will learn: You will be taught chiefly about five main topics. These include mathematical tools ➕, financial applications, financial theory and modeling 💰, computational training 💻, and real-world training.
What it provides: Cornell University 🎓 also offers a financial engineering program with an acceptance rate of only 7%. The duration of this program is about 1.5 years.
What you will learn: The program has a video system that can broadcast lectures and seminars between the main college and the Manhattan campus. All of the lecturers are from Wall Street firms, and the classes are all about project teams sponsored by these leading financial firms.
What it offers: This is a course that comprises ten videos which are available for free on both this platform and YouTube. Watching all these can help you understand very basic someday trading before jumping into more complex topics.
What you will learn: Each video has a separate lesson for the students. The topics include support and resistance, placing orders, managing risk, reading price action, understanding trading psychology, and reading candlestick candles.
What it offers: This course is taught by John Ducas, who aims to teach students all about the stock market and the complexities of investing money. You will be able to access all the online video content through the audit option.
What you will learn: You will learn all about the stock basics, previous investors and their tricks, reading financial statements, investing strategies, the IPO process, and the stock exchange.
What it offers: This course is all about teaching students the right skills and techniques for trading in the stock market and day-to-day trading strategies. You will be able to learn how to analyze and understand the past performance of the strategies.
What you will learn: You will learn how to discuss money management, how to list the types of day trading strategies, how to perform live trading, how to identify indicators, and more.
Step 3: Job
There are a lot of online platforms that can help you find the right gig for yourself.
- Overview – This platform serves as an online brokerage firm. You can join them to start working as an online broker.
- Highlight – They offer a lot of resources on their platform and have made certain plans with their own prices for you to choose from.
- Website – TastyTrade
- Overview – This is another online brokerage firm but with more reach than the previous one. It has several multinational connections as well.
- Highlight – You will be able to invest globally and get deals from all over the world using this platform.
- Website – Interactive Brokers
- Overview – Another online firm, this one, is the parent company of several online trading and securities companies.
- Highlight – They offer a lot of resources for use, including research tools, web trading tools, and technology.
- Website – Trade Station
These were all of the steps required to become a day trader. We have seen that some of these are very difficult while others are very easy.
This is exactly how your work is going to be as well. So buckle up and get ready to become a successful day trader. 😉 If you ever have any more questions in mind, feel free to ask in the comments down below. I will answer as soon as I can. 😀
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