Day trading is a dream job for many people. Unfortunately, few make it. Statistics say that 90% of traders blow their accounts in the first three months of trading. Therefore, being a day trader can be considered one of the toughest jobs, with your mental skills constantly tested as you try to join the prestigious 10% of traders who have made it.
Before we show you how to become a full-time day trader, here are some underlying pros and cons that every trader should consider.
Benefits of day trading
Day traders are independent
You are your own boss, you don't have to get up early and work from 9 to 5.
Own schedule as a day trader
If you are not feeling well or want to take a day off, you do not have to ask anyone for permission.
Trade develops intellect
One of the biggest mistakes you can make as a trader is getting to the point where you think you know everything. Trading is a lifelong process and you should always be looking for new pieces of information.
You can shop anywhere in the world
Nowadays we live in all you need is internet access and a laptop. This allows you to travel all over the world and shop wherever you want.
Trading is a prestigious job
Being part of this 10% of profitable traders will resonate among the others.
You can make a lot of money by trading
Once you are profitable, your trading account can turn into a money making machine.
Disadvantages of day trading
You can lose a lot of money by trading
If you are not good at trading, you are likely to lack risk management and make mistakes. You can very easily join these 90% of traders who blow up their accounts very quickly.
Day traders face loneliness
Being your own boss and being alone while you work can make you lonely quite quickly. Therefore, always plan social activities during the period when the markets are closed.
Trading takes a lot more time than you think
Depending on the number of instruments you trade, trading can be very time dependent. You continuously scan the market for new opportunities, record your trades, manage your positions and much more.
Markets will challenge your thinking every day
Even if you think you have the best strategy in the world, you won't win every trade and you will most likely experience a series of moves in your trading career. These scenarios can be mentally exhausting and you need to be able to get through them without making mistakes that could cost you even more money.
You need money to make money
Many people think they can live on $500 or $1,000 in their trading accounts.
The truth is, you need a lot more to make a living as a day trader. Luckily, we can show you how to become a full-time day trader without having tens of thousands of dollars in your trading account.
Day trade with your own money
Most retail brokers allow you to open a trading account with as little as $100.
It's foolish to even think that you can make reasonable money with $100.
But what about $500 or $1,000? It's not such a small amount, is it?
Let's take a look at our FTMO Equity Simulator where we set the starting capital to $1000 and we tested for 10 different scenarios where your win rate is 55% with the risk:reward ratio set to 2, risk rate 1% per trade and 22 trades executed, so you need to make at least 1 transaction every day for a whole month.
As the results show, the worst-case scenario after a month of trading would be that you get $930, which equates to a 7% loss, while the best-case scenario is $1,260, which equates to a 26% gain.
If we look at the average and most realistic results, you will win approximately 10% of your account, which is equivalent to €100.
So after a month of daily trading you will have made approximately $100.
We all agree that this is not a sustainable outcome.
Let's see how this money would grow over time if you could withdraw 10% every trading month.
| Month | earlier | % | Total |
|---|---|---|---|
| 1 | $ 1000 | +10% | $ 1100 |
| 2 | $ 1100 | +10% | $ 1210 |
| 3 | $ 1210 | +10% | $ 1331 |
| 4 | $ 1331 | +10% | $ 1464,1 |
| 5 | $ 1464,1 | +10% | $ 1610,51 |
| 6 | $ 1610,51 | +10% | 1771,56 $ |
| 7 | 1771,56 $ | +10% | $ 1948,72 |
| 8 | $ 1948,72 | +10% | 2143,59 $ |
| 9 | 2143,59 $ | +10% | 2357,95 $ |
| 10 | 2357,95 $ | +10% | 2593,74 $ |
| 11 | 2593,74 $ | +10% | 2853,12 $ |
| 12 | 2853,12 $ | +10% | 3138,43 $ |
| 13 | 3138,43 $ | +10% | 3452,27 $ |
| 14 | 3452,27 $ | +10% | 3797,5 USD |
| 15 | 3797,5 USD | +10% | 4177,25$ |
| 16 | 4177,25$ | +10% | 4594,97 $ |
| 17 | 4594,97 $ | +10% | 5054,47 USD |
| 18 | 5054,47 USD | +10% | 5559,92 $ |
| 19 | 5559,92 $ | +10% | 6115,91 USD |
| 20 | 6115,91 USD | +10% | 6727,5 USD |
| 21 | 6727,5 USD | +10% | 7400,25 USD |
| 22 | 7400,25 USD | +10% | 8140,27 USD |
| 23 | 8140,27 USD | +10% | 8954,3 USD |
| 24 | 8954,3 USD | +10% | 9849,73 $ |
What you can note here is that it would take 24 months (2 years) to build your account to $10,000. Also remember that you cannot withdraw anything from the account during those 2 years. day trading your full-time job off the table.
After 2 years, you can withdraw $1,000 from your account every month if you can earn the 10%.
For most people, $1,000 per month is a bare minimum to cover rent and other living expenses.
Why Most Small Retailers Fail
We've all seen the popular disclaimer on Forex broker websites and banners that say the majority of retail traders lose money. Although over time we may no longer be aware of this message due to our exposure, it nevertheless changes the fact that this is the truth in its entirety. Many retailers face this at some point. However, you are more likely to experience this when combined with a small account size.
The purpose of this article is to expose the complexity of why most retailers fail.
Could it be greed or sheer lack of knowledge and understanding of market dynamics? It can't be any of these reasons, because one thing is certain: among the inflated accounts were accounts of traders who had real profitable strategies and a good understanding of overall market dynamics.
So what causes these retailers to fail so badly?While others believe that greed and patience are the main reason for the massive failure of most retailers, I believe there is a third important factor that is often overlooked.
That's the problem when retailers start with a relatively small account size/starting balance.
As a retail trader who has been trading the crypto, forex and index markets for the past three years and has worked with many traders, I am writing this as a guide for all the retail traders out there. It is no surprise that most retail traders enter the financial markets primarily looking for an additional source of income, a new job on top of their normal 9 to 5 job, and sometimes a hobby.
With this in mind, it becomes very difficult for a trader trading a small account, such as a $200 account coming from a $1,000 salary, to recognize the importance of risk management and the risk-reward ratio.
This $200 trader will be faced with the daunting task of risking only a maximum of 1-2% of his total assets per trade. trade.
I challenge you to tell the trader to risk only $2 (1% risk) per trade. trade for a modest $6 (3% profit) per trade and they will think you are a joke.
However, tell another trader with $200,000 in equity to risk $2,000 per trade. trade for a return of $6,000 and the trader will be happy to do so. In this scenario, $6 worked a bit, which to be fair, it does, but percentage-wise it was the same as the trade executed by the trader with more equity.
The scarcity of most retailers who support me is one of the main reasons for the high failure rate among this class of merchants, and not just the issue of greed and patience.
My advice to retail traders is that once you think you are ready to trade live and have a good, proven strategy in place,the next hurdle should be getting oneFTMO account.
Although this can be challenging and will take some time, it is worth the effort.
Most people will think that they can make it trading $100 to $2,000 in a few weeks, that is just survival and will not help you in your trading career in the long run. Instead, find alternative ways to reach the initial equilibrium other than your own, only if you don't have enough capital to finance yourself.
This will help you develop as a trader and ensure that you do not fall prey to survival/improper risk management.
Pursuing impossible results
Imagine a small trading account of $1,000. If we risk 2% - $20, how much profit can we expect? If we consider the 1:1 rule of fixed money management, we can expect a profit of around $20 per dollar of trade. To reach the average monthly salary ($1,500), you need 75 profitable trades. Furthermore, the $1,500 profit would mean a monthly return of 150%, which is completely extreme and unsustainable in the long term. Unreasonably high expectations and insufficient capital lead to fatal losses.
Pressure on your psyche
Poor capitalization negatively impacts the trader's psyche. If we can't afford to put more money into trading, we are constantly under higher pressure. Trading under unnecessary pressure is a major disadvantage and should be avoided by all traders.
Day trading for your own trading firm
If you are a profitable trader and just don't have enough capital, there is a way you can become a day trader.
In ourFTMO Challengeyou can trade up to $400,000 and we require a monthly appreciation of 10% and this is considered a limit.
A profit of 10% was chosen because it is motivating and yet achievable.
Hardly a day goes by where an FTMO challenge is not realized in all our projects.
Some traders may find this profit target too high, but we have also set a 10% profit target.maximum loss.
That's why we want the trader to do thatserve10% of the original balance within 30 days,without losing10% of the original balance.
So both the desired profit and the maximum allowable loss have been achievedbalance.
Since we are also traders, we know that sometimes there are months that don't line up with our plan.
If you do not achieve the desired profit and your account balance is positive and all positions are closed at the end of the trading period and you do not violate any other rule, we will send you a new FTMO Challenge account to try again.
Thanks to a fairly large number of traders, we have an idea of what to expect from traders who have progressedFTMO a bit.
In general, more caution is taken with the FTMO account and as a result the average winnings are lower than with the FTMO challenge. Earning tens of thousands of percent are just rare exceptions. As investors, we're happy to see onelong-termincrease of 4-7%.
Let's compare two accounts: a smaller account of about $1,000 and an account size$ 100.000that we offer to manage.
Let's be optimistic and expect a monthly increase of 7%. The final profit on the $1,000 account would be $70.
Our FTMO account, provisioned with $100,000, would print the surplus$ 7.000, but in this case it is necessary to deduct our share of the profit.
After you take our 30% split, you will earn a net profit of$ 4.900which we are pretty sure is more than enough to cover all living expenses and have a nice vacation.
If this was your first month of trading, so will werefund the compensationyou originally paid for the FTMO challenge.
If this sounds too good to be true, check out the interview with one of our FTMO traders Nikita.
https://youtu.be/_kKvGHRZEFQ
Finally
It's safe to say that you'll need at least $10,000 to consider day trading as a full-time job.
Not everyone can afford to put this amount into their trading account, but if you are a profitable trader and think you can handle our FTMO Challenge, you can trade up to $400,000 for our company.
Start our free trial today and begin your journey to becoming the best full-time day trader you can be!
