There are many different ways to make money out there. Some of them are fairly basic and common, while others are considerably more obscure.
For most people, the idea of trying to make money as a day trader probably falls into the category of unusual or obscure. Nevertheless, this doesn’t stop people from being interested in the concept.
In fact, there are a lot of success stories out there about day traders who have made a lot of money, so it’s no surprise that day trading gets a lot of attention. But, what does this mean for people on the outside? Is day trading a good choice for earning money or is it something that looks better than it actually is?
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Making Money As A Day Trader
Well, today we’re going to take a look at day trading and see whether it is worth getting involved with.
The Concept Of Day Trading
As the name suggests, day trading is a specific style of trading stocks on the stock market. With this technique, people buy and sell shares of a stock (or several stocks) within the same trading day. This pattern means that there is the potential for faster profit than with other types of trading, although loss can occur faster as well.
In theory, you could go into your office at 9:30 am and be thousands of dollars richer by 10:30 am. Of course, you could be thousands of dollars poorer too, which is where the challenge comes in. Needless to say, the job can become incredibly stressful.
Day trading is also very monotonous. You end up spending hours upon hours simply watching screens, trying to figure out when the best time is to make a trade.
Many of your moves are based on charts and looking for patterns. Though you have computer programs to help you identify these patterns (if you can afford the software), you still have to keep a watchful eye on the market to make the final call whether to trade or not.
Day Trader Programs
On a side note, you may find some sites that promote various programs or algorithms that are supposed to predict the market and improve your odds.
Simply put, that isn’t possible. If you had software that could predict the market reliably, you'd be a billionaire and would not share the software.
The market is far too volatile for any algorithm to ever predict. That’s hardly surprising, as changes in the market are based on a wide range of things, many of which are entirely unpredictable.
A computer cannot predict life events. Day trading and trading, in general, would be completely different if such a thing were possible.
Because of this, anything claiming to give you an edge in the market is going to fail miserably. In most cases, this type of program is just a scam and is trying to trick you into spending money.
Is It Right For You?
Despite the myths that surround it, day trading is a legitimate way to make money. It's not gambling per se, since there is some skill involved, but it's not a normal paycheck where you can clock in and clock out with guaranteed income (a similar idea is true for investing in ICOs).
There is a lot of risk with earning money this way and you could lose money just as easily as make it. In fact, day trading is a combination of wins and losses, where you are aiming to come out ahead at the end.
For some people, being successful in day trading has been about luck. They made the right decision at exactly the right time and made a fortune doing so.
But, for most, day trading is about skill. To make money at it, you have to be able to read and interpret the market and the way that it changes. Many times making money is a boring calculation of getting more wins than losses, rather than hitting it rich and going home.
This means that day trading tends to be a tough job and it can also be a stressful one. It can also be a bit of an emotional rollercoaster as there will always be some trades that you lose.
For some, losing trades may not be an issue but others can find this aspect very difficult to adjust to. The most successful traders develop their own formula (or copy a mentor) then remove emotion from the mix.
They make the trade based on metrics, not emotions.
Even if you are okay with losing trades, think about how you’d feel if you had a bad run for a couple of weeks. This will happen from time to time and can be incredibly depressing.
With all of that in mind, day trading isn’t for everyone. The skills you need are ones that you will have to learn and they will probably come faster to some people than to others.
In many cases, learning those skills will take time and will also cost you money. After all, people learn from their success and from their mistakes, and when it comes to trading, your mistakes will tend to cost money.
For many people, day trading involves a very different mindset and collection of rules than they are used to. This can make it that much harder to get to grips with day trading and get to the point where you are making money consistently.
If you are seriously considering day trading as a way to make money, I recommend taking the time to research the field properly. Ideally, you should have a solid knowledge of what’s involved and the various risks, long before you actually deposit money.
Don't forget that you also need startup capital too! And I'm not talking about a few hundred dollars, although that may work for some extra diligent people.
You'll need a few thousand dollars. Some ticks in your stocks may just make a few pennies, so you need a large volume of shares (or an expensive stock) in order to make good money.
A 2% rise in a stock where you invested $1,000 is still only $20! Bump that to $10k and now you made just $200. Two hundred dollars isn't bad for a day's work, but remember that you're risking the full ten thousand dollars in order to make that money.
Making Money Without The Risk
If you’re wanting a non-conventional way to earn money, day trading may sound appealing at first. It tends to attract folks looking to make quick money in order to pay the rent at the end of the month or get out of debt. However, the amount of risk and the challenges involved in this way of earning money can make the concept seem a lot less desirable.
Thankfully, there are other non-conventional ways to make money, including methods that have a lot less risk and stress.
Of these methods, the one that I always come back to is affiliate marketing. You’ve probably heard me talk about this before but in case you haven’t, affiliate marketing is a technique where you make money by promoting products from other people and companies.
This means that you can make money online but you don’t actually have to create or buy any products. Plus, you get to promote things that people are actually interested in. For example, if used Amazon’s affiliate program, you could make a commission off almost anything sold on Amazon.
That’s pretty impressive if you think about it because Amazon has so much to offer. And, that’s just one company. There are plenty of others out there with their own affiliate programs and products. So, you can choose products that suit your own interests and that you think people will want.
The style of affiliate marketing I do involves building a website. This site then becomes something that you work on and grow over time. As the site progresses, you will tend to gain more visitors, get a better reputation, and make more sales.
You won't make an instant profit like with stock trading, but over the long term, this website can make you passive income, meaning it'll get visitors and sales without you needing to be behind the scenes.
It's not as fancy or cool sounding as being a day trader, but it works, and you can get income from your affiliate site for many years to come, often growing income over time.
The upside is the same as trading stocks, but the risk is much less because you only have to put a few hundred dollars on the line each year to pay for hosting and domain costs. The rest is free (your labor)!