Are you a person doing day trading in part-time and earning extra income for the time being? Do you badly want to take up day trading as your full time living source and dreaming of that day? Of course, a life with a computer and an internet connection working at any preferable place under the sun is the ideal life for many.
Day trading can be aptly followed by entrepreneurs for a serious living as any other business. However, they must understand that it will be a major decision and a serious commitment in their life.
You can verify with the following 5-point checklist and can find out whether you are fit enough to take up day trading for living.
1. FIND OUT WHETHER YOU HAVE A TRADING EDGE
Though you have made good enough profits in day trading in part time till now, it is very important to verify your commitment or your trading edge towards a full time business.
You must consider your
Profits earned in Day Trading
When considering the profits you have so far earned, you may think of yourself as a profitable day trader. This feature is the active stimulant that induces you to further involvement.
Time Spent in Day Trading
This must be calculated including the days when you haven’t actually traded but indulged in trading setups. However, it is meant as trading session only. On the whole, it will be a good sign if you have traded at least 60 trading sessions.
Exact Number of Days Spent on Day Trading
As far as the days are counted, it must be minimum 30 trades. Of course, the more the number the better.
Quality of Day Trading you made so far
Above everything the quality of trading done is the most important factor that decides the trading capacity of a person. This does not depend totally on the profits earned. You may have earned huge profits in day trading so far, still your trading may lack the quality. May be it happened due to sheer luck or coincidence.Your trading track over a certain period must be considered a quality one only when it is full with consistent trading sessions depicting a good trading plan. The planning part is very important. In case you planned your trading sessions and implemented it with success, then you have a quality day trading track.
2. ARE YOU EQUIPPED WITH SUFFICIENT CAPITAL?
Before answering this question, you need to find out two calculations:
- How much you have to earn to lead a comfortable living: As a person who understands financial matters, you must be able to answer this immediately. In case, you do not know the answer, you must first figure out your monthly expenses and the amount you need to manage them. This becomes very important since day trading is not a salaried job and the income is volatile proper cash flow planning and budgeting is very much essential for full time day trading. In short, your expenses are fixed and your income will be volatile.
- Trading Size: Now you have an idea; you have to find out the trading size you need to indulge in to meet your goal of income.
3. HAVE YOU ENOUGH SAVINGS?
Savings refers to the net savings, which stay behind with you after paying all your debts and expenses. Only when you have enough savings, you can pay your yearly debts and can indulge in day trading without any pressure. This is very important for your day trading performance. In case you feel the pressure then you will be tempted to enter into risky situations and may incur loss. So, it is better to avoid situations of this kind. It is an unwritten truth that immediate financial tension will definitely lead to bad performance in day trading.
4. HOW ABOUT FORSAKING YOUR PRESENT JOB?
Many people love their job for the social status it provides. They just love the opportunities that job provides them in mingling with the society. However, career in day trading will not provide such opportunities. Socializing and recognition among your circle will be much limited.Instead, it will provide isolation and ample freedom. Ask yourself whether you will enjoy that kind of life.
5. DO YOU HAVE AN ALTERNATIVE?
Planning for the future must be ready in hand. With a safe stop-loss you must engage in day trading. Situations may turn against you; you may spend all your capital and you may come to a stage when you cannot continue trading further. In that case, you must be ready to go to a job or adjust the situation with some other plan.
Entering into Day Trading for a living is certainly a brave act. Everyone must congratulate you for having taken a step towards your dream. Now, let us discuss the result of your 5-point check.
In case, you failed in the first two points, then ‘Day Trading for a Living’ is not for you.
Point 3 encourages your chance of trading successfully.
Point 4 wants to reconsider
Point 5 tries to control damage. As a trader, you have to face risks.
When you pass all the 5 points, then you are fit to enter into Day Trading for a Living.
Thank You for Read this Article,
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