Investing

Young People Who Day Trade for a Living

Young People Who Day Trade for a Living | Young Finances

I’ve spoken about day trading before and how I tried it one summer.

For three months straight, I traded foreign exchange using technical analysis, fundamental analysis and sometimes sheer luck.

I have also mentioned my friend the Shinobi Trader who trades for a living and uses options and forex to trade.

Both are highly leveraged trading instruments and I should remind you that trading leveraged instruments involves risk.

Please continue to the full disclosure regarding trading.

What is Day Trading?

Day trading involves buying and selling a financial instrument at a high frequency.

For example, if you decide to become a day trader of stocks, you would buy and sell several times a day. If you decide to day trade foreign exchange, you would long and short several times a day.

I have met a few day traders.

I knew one who day traded stocks to the tune of one million dollars worth of transactions.

He had losses of about 800 thousand dollars and netted about 200 grand for the year.

Not bad huh?

But I’ve also seen the other side. Personally, I experienced a loss of my entire trading account when I day traded forex.

However, I was able to learn from my mistakes and now I can trade profitably. I learned that day trading is not for me because it was too emotional.

Can I Make a Living Day Trading?

Making a living doing something that does not involve guaranteed money is pretty risky. In terms of risk I would list the following from least risky to most risky.

  • Picking up a check from passive income sources
  • Working a job
  • Investing
  • Day Trading

Obviously there are more ways to generate income that could fit into that spectrum, but this simplified example is just to give you an idea on how risky it is to day trade.

It is possible to lower the risk.

There are ways to trade forex with low risk and any time you learn more about your craft, you are lowering the risk.

Is it possible to make a living day trading?

This trader would say yes.

Mom Day Trader updates the blog with trades that she has made.

On June 4th, 2011, she placed three trades. Two were winners and 1 was a loser. She was able to trade during the day and bring in 200 bucks. Not bad for a half a days work.

Would you consider day trading?

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  • http://twitter.com/moneycone MoneyCone

    I wouldn’t, but I admire those who do (profitably!)!  

    • http://www.FSYAonline.com FinancialSuccessforYoungAdults

      Exactly! :)

  • moneycone

    I wouldn’t, but I admire those who do (profitably!)!  

    • http://YoungFinances.com/ Young Finances

      Exactly! :)

  • http://novelinvestor.com Novel Investor

    Definitely something I’ve thought about doing myself.  But the time requirement is big in my opinion.  It would have to become my full time job and that’s a big commitment.

    • http://www.FSYAonline.com FinancialSuccessforYoungAdults

      Yeah, when I was a day trader for a summer it was all I did. I basically changed my whole routine based on the market. And with forex which is a 24/7 market I slept very little. Which, when I think about it, probably made my nerves worse.

  • http://novelinvestor.com JP @ Novel Investor

    Definitely something I’ve thought about doing myself.  But the time requirement is big in my opinion.  It would have to become my full time job and that’s a big commitment.

    • http://YoungFinances.com/ Young Finances

      Yeah, when I was a day trader for a summer it was all I did. I basically changed my whole routine based on the market. And with forex which is a 24/7 market I slept very little. Which, when I think about it, probably made my nerves worse.

  • http://www.ericjrosenberg.com Eric

    Day trading is just a glorified form of gambling. Sure, you can be better at it than most people and do well most of the time, but you never really know and you can lose big without warning.

    • http://www.FSYAonline.com FinancialSuccessforYoungAdults

      Would you consider all trading a form of gambling? I see your point though, it does seem like day traders just trade recklessly. I think less is more when it comes to getting in the markets.

      • http://www.ericjrosenberg.com Eric

        I think any form of active trading walks the fine line between gambling and investing. Only long term, diversified portfolios and finding undervalued investment opportunities can lead to a solid, long term gain.

  • http://www.narrowbridge.net Eric

    Day trading is just a glorified form of gambling. Sure, you can be better at it than most people and do well most of the time, but you never really know and you can lose big without warning.

    • http://YoungFinances.com/ Young Finances

      Would you consider all trading a form of gambling? I see your point though, it does seem like day traders just trade recklessly. I think less is more when it comes to getting in the markets.

      • http://www.narrowbridge.net Eric

        I think any form of active trading walks the fine line between gambling and investing. Only long term, diversified portfolios and finding undervalued investment opportunities can lead to a solid, long term gain.

  • Anonymous

    I traded forex back in 2007 and lost much of my account. Over all I think I only lost about $500 on a $2000 account. Its definitely something that takes a special person to trade Forex. I had winning days and losing days, but the goal is to stick with it long enough and have more winning days than losing days. I don’t miss waking up at 3am to get ready to make my positions at 4am. That was the hardest because you had to be on top of the markets at specific times if you wanted to capture the move of the market.

    • http://www.FSYAonline.com FinancialSuccessforYoungAdults

      I’ve heard that most forex traders blow their first account. It’s sort of like a rite of passage lol. I remember getting up early as well. The best trades in my opinion are during London’s trading hours which is right at 4am EST.

      • http://twitter.com/squirrelers squirrelers

        I remember a guy from grad school who supposedly spent a lot of time day trading. This was an MBA program I was in (full-time), so people had some time and were money oriented. Anyway, supposedly this guy made enough in 2 years to buy a Lexus.

        Personally, I don’t care to day trade. But it’s interesting how some folks do have success.

        • http://www.FSYAonline.com FinancialSuccessforYoungAdults

          Two years to a Lexus? That’s some pretty good trading. He had to be using money he didn’t mind losing for him to spend it on a car. That also helps take the emotion out of it.

  • http://www.bankaim.com Bank Aim

    I traded forex back in 2007 and lost much of my account. Over all I think I only lost about $500 on a $2000 account. Its definitely something that takes a special person to trade Forex. I had winning days and losing days, but the goal is to stick with it long enough and have more winning days than losing days. I don’t miss waking up at 3am to get ready to make my positions at 4am. That was the hardest because you had to be on top of the markets at specific times if you wanted to capture the move of the market.

    • http://YoungFinances.com/ Young Finances

      I’ve heard that most forex traders blow their first account. It’s sort of like a rite of passage lol. I remember getting up early as well. The best trades in my opinion are during London’s trading hours which is right at 4am EST.

  • 20’s Finances

    I am not that comfortable with that much risk. Although, I can see that it is quite profitable (or can be). Great post. I definitely need to learn more about investing.

    • http://www.FSYAonline.com FinancialSuccessforYoungAdults

      You can learn to do it yourself or pay someone to do it for you. I used to want to manage all of my own investing but now I am ok letting someone else manage a little for me. If there is a specific topic you are interested in let me know! :)

      • Anonymous

        Day trading is a tough business.  I would say the bulk of people who try it will be out of the business in less than a year.  It is similar to gambling in many respects.  Without excellent risk management skills and a rules-based system you can get into trouble quick…

        • http://www.FSYAonline.com FinancialSuccessforYoungAdults

          Rule based system. That’s exactly what it takes. Even better would be to program an emotionless bot to trade for you. But then you would be Goldman Sachs…

  • 20’s Finances

    I am not that comfortable with that much risk. Although, I can see that it is quite profitable (or can be). Great post. I definitely need to learn more about investing.

  • http://www.20sfinances.com 20sFinances

    I am not that comfortable with that much risk. Although, I can see that it is quite profitable (or can be). Great post. I definitely need to learn more about investing.

    • http://YoungFinances.com/ Young Finances

      You can learn to do it yourself or pay someone to do it for you. I used to want to manage all of my own investing but now I am ok letting someone else manage a little for me. If there is a specific topic you are interested in let me know! :)

  • http://www.20sfinances.com 20sFinances

    I am not that comfortable with that much risk. Although, I can see that it is quite profitable (or can be). Great post. I definitely need to learn more about investing.

  • NetWorthProtect

    Day trading is a tough business.  I would say the bulk of people who try it will be out of the business in less than a year.  It is similar to gambling in many respects.  Without excellent risk management skills and a rules-based system you can get into trouble quick…

    • http://YoungFinances.com/ Young Finances

      Rule based system. That’s exactly what it takes. Even better would be to program an emotionless bot to trade for you. But then you would be Goldman Sachs…

  • http://twitter.com/squirrelers squirrelers

    I remember a guy from grad school who supposedly spent a lot of time day trading. This was an MBA program I was in (full-time), so people had some time and were money oriented. Anyway, supposedly this guy made enough in 2 years to buy a Lexus.

    Personally, I don’t care to day trade. But it’s interesting how some folks do have success.

    • http://YoungFinances.com/ Young Finances

      Two years to a Lexus? That’s some pretty good trading. He had to be using money he didn’t mind losing for him to spend it on a car. That also helps take the emotion out of it.