Is day trading as a career? Of course, it is a career that millions choose to pursue. But is day trading a good career? I am afraid not many can say yes. Only 5% of day traders make consistent money while the rest ultimately loses it. But it happens in any industry. People lose, and people win. To be among the ones who benefit from day trading, you need extensive knowledge, the right tools, and techniques. And with this blog, I hope you can gain valuable information for your desired career.
What Does a Day Trader Do?
In my previous blog How Much Does A Day Trader Make In 2022?, I explained in detail who is a day trader, and what he does to earn profits. To sum it up, a day trader buys and subsequently sells financial instruments like stocks, currencies, or futures and options on the same trading day or even multiple times over the course of a day. To be a successful day trader, you need to have knowledge of the trading world and a good idea of your risk tolerance, capital, and goals.
Is Day Trading As A Career?
If you are new to the trading world, day trading might not be an ideal choice to start with. Even the most seasoned day traders can experience huge losses with their well-planned strategy. Unlike other types of trading, to day trade stocks, you are required at least $25,000 upfront. To avoid losing that big amount of money, most beginners will try using a demo account for 1-6 months before they are ready for their first trade.
How Much Money to Start Day Trading?
According to the Pattern Day Trader Rule, day traders must maintain that amount as a minimum balance in their margin accounts at all times. If the margin account goes below the number, the trader will be unable to purchase or sell assets until the account is restored to the minimum necessary amount.
How Much Do Day Traders Make?
Comparably states that day trading salary in the US ranges from $12,265 to $328,665, with a median salary of $59,038. The middle (57%) of day traders earn between $59,040 and $148,39, with top earners (86%) making $328,665.
However, how much money you can make day trading depends heavily on how much you start with and how many trades you perform a day. For more understanding of how much a day trader makes, you can check out the blog How Much Does A Day Trader Make In 2022? dedicated to answer the question.
How Much Tax Will You Have to Pay As a Day Trader?
According to Comparably, for an individual filer in this tax bracket, you would have an estimated average federal tax in 2018 of 22%. After taking out a federal tax rate of 22%, day traders could expect to bring home $53,738/year, with each paycheck equaling approximately $2,239.
Is It Worth Being a Day Trader in 2022?
It is obvious that day trading is not for everyone. It can be challenging to novice traders but it is extremely rewarding and liberating. To decide if it fits you, take both the pros and cons into deep consideration:
- Be your own boss: Day trading provides you with freedom and entrepreneurial spirit as you can work from home and are your own bosses.
- Avoid overnight risk. There will not be any overnight risk as your day trading will be completed by the close of the market.
- Trade anytime anywhere. As long as you have an Internet connection, you can trade. You can do it while traveling frequently and not be limited by an office or a time clock.
- No degree required. You do not need to have any college degree or certification to be a day trader.
- High minimum balance. As stated above, you are required a $25,000 minimum balance.
- Potential for stress. The trading style can be aggressive, therefore, stressful. And this style is not for everyone.
- Self-discipline is a must. If you consider day trading as your career, it is important to build a full-time commitment to it.
- Risk of overtrading. Due to its fast nature, day traders are tempted to do ”revenge trade” that can wipe out their account in a short amount of time.
Many might think day trading is for those who love quick money. It is true that you can earn a profit and call it a day every day. But day trading as a career is only profitable in the long run when you take it seriously and do your research. To avoid being among the 95% who ultimately lose money, you need to equip yourself with extensive knowledge about the market, the techniques, the strategies, and the tools that help you earn high profitability. Don't sweat it yet, Library of Trader has a good collection of day trading courses that can help you put your worries to rest and push your day trading to the next level.