Too Cool for School – Day Trading As A Career
There are career seekers who select the most-traveled, “predictable” road.
Life is a journey often inspired by the status quo, well-meaning family, or even good friends. This leads many people along the path of education and then the job experience for life.
Then there are the risk-takers who step outside the “norm” and onto a path of possibilities. This is the world of trading for many on the Simpler Trading team.
They longed for something more, taking into consideration the risk while focusing on the opportunity.
(Check out the free video, above, for insight into trading this changing market.)
Drilling down further, many of our traders focused on day trading as a career. Some even left behind the school path and all ditched corporate life at some point. This path filled the longing of pursuing success and developing an income stream controlled by the actions of the trader.
The trading world encompasses almost everything that touches our lives – all the companies within the stock market, commodities, futures, Forex, and even cryptocurrency. The market is a mammoth economic process that will continue on its path whether you choose to be in it or not. It is an alluring and fascinating world of possibilities.
While bankers, brokers, and financiers are busy with important pieces of paper, the day traders at Simpler Trading are carving an edge in a market environment of extreme volatility. Which one of these had a more exciting day?
Our answer lies with those who pursue day trading as a career.
Strategies for day trading as a career
There are strategies that professional traders use for a whipsaw environment like this current market.
Day traders need strategies for up and down movement that help them achieve consistent gains and account growth. Volatility is nothing new. All traders have seen volatility, but in 2022 the market is already experiencing levels of extreme volatility.
The volatility index (VIX), a key indicator of how the market is moving, is making huge ranges. Because of that, we are seeing extreme swings in the overall market.
The crazy whips in the market can seriously affect and ruin a lot of traders’ positions. This volatility is crazy – and volatility like this can change your life.
Volatility can lead a trader forward in the best way, or, unfortunately, it can cause change in the worst way.
If a trader isn’t sure how to navigate volatility, it makes sense to “regroup” mentally to learn how to get better at handling volatile markets.
This market is not going anywhere. Traders need to determine how to avoid getting rammed by it again and again.
Traders need a plan for exactly how to take advantage of volatility rather than following victim to it. Traders should spend time gathering information, assessing important market signals, and taking advantage of volatility.
The benefits of day trading in today's market conditions may appear scary to some. Yet, day traders are almost giddy about the possibilities the volatility creates.
As traders learn to grasp the market volatility experienced the past few years, several trends are noticeable. For the most part, the broader market has continued higher. Even as it rose, we felt and saw a big whip from chop throughout the market.
Many swing traders are simply tapping out, holding onto cash, and just waiting for more steady trends to emerge in the market.
This market has day traders aiming for low-risk, higher-reward options plays.
This environment can be intimidating, but day traders are open to changing their perspective to find opportunities in the volatility.
‘Green day’ strategies for volatile market
When day traders have “red days,” or losing days, they should consider that they are doing something wrong. This isn’t the time to take it personally. Traders need to step back and analyze the trades that worked, and those that failed.
As traders review setups and strategies, this gives them the chance to look back and understand why there were disappointing red days. When we understand actions needed to change for successful results, this is the learning process at play.
The process includes showing up and making sure that we are taking the best actions to support our trading plan. If that yields green (profitable) or red days that is fine.
As day traders learn to assess, learn, and adapt, they will find more green days than red. If a day does lead to being in the red, there will be something to learn from it. If necessary, go back to the trading room to assess and focus on the fundamentals of day trading strategy.
The market is full of risk and shifts that can trip up any day trader. Focus on having a good handle on risk to avoid giving back all the profits from the wins.
Who should pursue day trading?
Other types of traders, such as long-term investors or swing traders, sometimes switch to day trading as a strategy to work through volatile markets. This type of whipsaw market often reveals those who are looking to day trade as a career.
Day trading is for those who want to embrace volatility in the markets.
In an uncertain environment, traders are encouraged to embrace volatility, because it's not going anywhere soon. An essential part of a trading plan is that traders need to protect their account. Learning day trading can help by limiting capital exposure with short-term trades, or day trading.
Investors and swing traders may want to add day trading to their trading plan to be ready for and take advantage of volatility.
Day trading also appeals to people who want to trade with limited amounts of capital. This trading method allows them to grow small accounts using scaled-back systems and strategies that take advantage of intraday moves.
Also, many day traders like having a good work-life balance. There aren’t many people who want to sit in front of a computer screen all day. It isn’t fun or necessarily healthy.
Good day trading strategy involves a well-rounded educational experience going into a trade. Day traders at Simpler pay attention to futures as these assets can reveal key price levels and daily information. (Traders add in the major indices – Dow, Nasdaq, S&P 500 – for a broader analysis.)
Futures trading allows traders to take advantage of the futures market and gain a deeper understanding of market flow.
Day trade any account size
For those wanting to day trade for a living, keep in mind the importance of starting small.
Using cheaper priced options allows for trading using smaller amounts of capital. This leaves open the ability to scale up and focus on larger percentage profits. Focusing on percentages, rather than dollars, lets traders catch trades they wouldn’t otherwise have made because they were afraid of the dollar amounts.
Something great about day trading is building upon the percentages. Making multiple trades – in shorter periods of time – can lead to a higher percentage of gains. What's powerful – even with smaller accounts – is developing an ability and a skill to enter this type of market in uncertain times and have the potential to boost capital.
Whether it be in seconds, minutes, or even a day, any trade that produces a return of 150% is a positive for all traders. That is what is exciting about day trading, and why day traders love volatility.
Be aware of pattern day trader rule
What is the “PDT rule?”
The pattern day trader (PDT) rule essentially restricts traders from taking more than four day trades throughout a week if they do not have more than $25,000 in a margin account. Traders don't want to get on the wrong side of this rule. Violation of this rule can mean a 90-day freeze on the trading account.
There are solutions and strategies to avoid violating the PDT rule. This is all part of a risk management plan for day traders, which is needed to maintain discipline with this style of trading.
Day trading opens doors for traders
Even swing traders are starting to gravitate toward day trading when they realize the potential benefits. Day trading is another tool that you want for a specific environment – volatility.
Day trading allows traders to focus on consistent percentage returns during a volatile market and discover the potential for consistent percentage returns to grow an account.
Day trading is for traders who want to apply new strategies to their trading plans, and day trading can be applied to options or futures.
This trading environment can be an answer for people who want to thrive in any market conditions.
Are you ready to take your trading “schooling” to a higher level and develop day trading as a career? If so, join us for our Day Trading Open House.