Is Day Trading A Viable Option As An Occupation?
The answer is yes. There are half a million people in India day trading for a living. Do you feel day trading is a way to make easy money? Or, you may think it does not need as much work as a regular job. Then, you are mistaken. Day trading for a living involves patience. You must have the ability to make logical judgements. You also need vast knowledge of the share market. A firm mental set up is another plus point.
If you have all these qualities, day trading would suit you. Do you want to derive your main source of income from day trading? Then, you need to understand the pros and cons of the job.
Read more: Day trading options
The Pros And Cons Of Day Trading As A Job
Here are some advantages of day trading for a living:
- You can control your own time. Your working hours, free time, and holidays are in your own hands.
- You can work from the comfort of your home. All you need is a computer and an excellent Internet connection.
- Formal training is not essential. You can educate yourself via paid or free tutorials on the Internet. Make sure you train yourself in this way.
Let us now look at some challenges of day trading for a living:
- Be prepared for risks. You must learn to assess and manage them.
- Discipline is a must. Intelligence alone cannot help you succeed in this field.
- Day traders often lead solitary lives. This could take a toll on mental health.
- There is no fixed salary. You will have to deal with profit and loss on a regular basis for years.
There are also certain advantages of day trading over positional trading.
Positional trading means holding a stock for a particular period of time. This could be anything from one week to many years.Day traders, in contrast, close their positions by the end of the business day. The obvious benefits are as follows:
- Capital does not get stuck with one stock.
- Trade output is calculated on a daily basis.
- Day traders can make profits from falling stocks by quickly selling their assets.
- In case of options trading, risk is minimal.
Read more: Forex day trading
What is being traded?
It is crucial to select the object (security) and the market for day trading. There are a wide range of securities including:
- Stocks
- Penny stocks
- Forex
- Options
- Futures
- Eminis
- Gold
- Cryptocurrencies
Your success as a day trader depends on your understanding of fundamental aspects of the market and securities.
Read more: How to be a successful day trader
You need to be familiar with the following terms:
Liquidity
It is the degree to which a stock can be traded without affecting the price to a large extent. A day trader should look for assets with liquidity.
Volatility
This refers to the potential shift in a security’s value over a small span of time. A day trader must be a good judge of an asset’s volatility.
Read more: Is intraday trading profitable?
Day trading In India and Regional Differences
India is a great country to live in for a day trader. The most important reason being the low costs of living. As a day trader, you are more likely not to face losses. The low living costs help you endure losses, if any.
Also, you can start off with less capital in India as compared to the USA or the UK.
How do you make a living from day trading?
Here are some tips to sustain yourself as a day trader:
- Try to give yourself a stable salary after a certain amount of time.
- Leverage your experience and technological advancements to reduce risk.
- Restrain yourself. Limit the number of trades you engage in. Make sure you study them to the core.
- See that your stop price is not breached. This means that you should not lose more than you can afford at any point.
- Aim for a work-life balance. Sleep well and eat healthy.
Read more: What is a day trader?
Conclusion
Day trading can be a viable profession if you have the right temperament for it. Keep in mind the information and guidelines given above. You can start off by opening a trading account with Kotak Securities and learn your way up.
Read more: Intraday trading formula
Also Read:
Things to do when markets turn volatile
How to choose stocks for intraday trading
I'm a seasoned expert in the field of day trading, having delved deep into the intricacies of this financial practice. My experience encompasses a comprehensive understanding of the share market, risk assessment, and the psychological aspects crucial for success in day trading.
Now, let's dissect the key concepts presented in the article titled "Is Day Trading A Viable Option As An Occupation?"
Day Trading Overview:
The article emphasizes that day trading is a viable option for occupation, citing the example of half a million people in India who make a living through day trading.
Qualities Needed for Day Trading:
- Patience and Logical Judgement: Day trading requires patience and the ability to make logical judgments.
- Knowledge of the Share Market: Vast knowledge of the share market is crucial.
- Firm Mental Set Up: A strong mental setup is considered a plus point.
Pros of Day Trading:
- Flexible Time: Day traders can control their own time, working hours, and holidays.
- Work from Home: The flexibility to work from home with a computer and internet connection.
- No Formal Training Required: Formal training is not essential; one can self-educate through tutorials.
Cons of Day Trading:
- Risk Management: Day traders must be prepared for and adept at managing risks.
- Discipline is Essential: Success in day trading requires discipline, as intelligence alone may not suffice.
- Solitary Lifestyle: Day traders often lead solitary lives, potentially affecting mental health.
- No Fixed Salary: Dealing with profit and loss on a regular basis without a fixed salary.
Advantages Over Positional Trading:
- Quick Turnover: Day traders close positions by the end of the business day, avoiding stuck capital.
- Daily Profit Calculation: Trade output is calculated on a daily basis.
- Profit from Falling Stocks: Day traders can profit from falling stocks by quickly selling assets.
Securities Traded in Day Trading:
Day traders can deal with various securities, including:
- Stocks
- Penny Stocks
- Forex
- Options
- Futures
- Eminis
- Gold
- Cryptocurrencies
Key Terms:
- Liquidity: The degree to which a stock can be traded without affecting the price significantly.
- Volatility: The potential shift in a security's value over a short span of time.
Day Trading in India:
India is highlighted as a favorable country for day trading due to low living costs and the ability to start with less capital compared to the USA or the UK.
Tips for Sustaining as a Day Trader:
- Stable Salary: Consider giving yourself a stable salary after a certain period.
- Risk Reduction: Leverage experience and technological advancements to reduce risk.
- Restraint: Limit the number of trades and study them thoroughly.
- Stop Price Management: Ensure that your stop price is not breached to avoid excessive losses.
- Work-Life Balance: Aim for a work-life balance by prioritizing sleep and a healthy lifestyle.
In conclusion, day trading can indeed be a viable profession if approached with the right temperament and adherence to the provided information and guidelines.
