A common question that should be on all prospective traders’ minds is, “is day trading the right career choice for me?” While working, traders unequivocally will experience emotional highs and lows, many times in the course of 1 day, and certainly over time. Trading can potentially be a very rewarding career, certainly monetarily, and for many it is very satisfying to reach some level of success in such a competitive field. The questions on prospective traders’ minds though are, “can everyone reach this level of success” and “is the reward worth the emotional and potential financial tolls”?
The honest answer is that being a day trader is not for everyone. Very few traders are immediately successful. Many lose large sums of money before eventually becoming profitable, while some never reach a profitable level of success. The reasons for this vary, from not putting in enough work, to not controlling emotions effectively, to simply not being intelligent enough to succeed in such a competitive environment. Even successful traders must deal with the vagaries of the market, knowing that they must save money when times are good so they are able to survive during the leaner market cycles.
Some traders never develop the emotional tools to deal with the ups and downs. While it is not surprising to most people to learn that no traders make money on 100% of their trades, it is surprising to some that many successful traders win on less than 50% of their trades. Some traders only succeed on about 30% of trades they take. While these traders may still be extremely profitable over time because their winning trades are much larger than their losing trades, they must deal with failure more often than success. Some personality types are incapable of ever being able to accept that this is the reality of the career. And though they otherwise are capable of being successful as traders, they are unable to develop the needed stress coping mechanisms.
There is a large learning curve with trading. No trader is immediately successful, and only maintains higher levels of success throughout their careers. Learning a new strategy is a daunting task, and traders must be ready to dedicate themselves fully. Successful traders stay humble, and realize they always have more to learn.
Aside from hard work, new traders must also accept the fact that it could be months before they actually realize any profits. A question all new traders must ask themselves (unless they have another source of income) is “can I survive for 6 months without a pay check?” It takes most traders at least this long to regularly become profitable, and even this is no guarantee that a trader will make money every month.
The good part of trading is that for those who have the personality type, dedication, and financial means to become a day trader, the income and satisfaction from becoming successful can be very high. If a prospective trader is interested in pursuing a career they should not be deterred by the challenges, but it is wise to consider if they are willing to endure the more difficult aspects of the job.
If a trader decides that they are ready to pursue a career in day trading, the best they can do is to educate themselves as much as possible, find a good mentor or adviser who is successful, and be ready to commit fully to making themselves successful.