In This Article:
Is Forex Trading For A Living Possible?
If you have a working internet connection, which is more accessible than ever in the world today, you can start online trading for a living. However, just because it is possible doesn’t necessarily mean it is easy. So, if you were interested in forex trading, where do you start? In this article we will discuss the benefits that come with making a living with online trading, what and where people trade, and offer some invaluable tips to get started.
Is Forex Trading For A Living Possible?
The simple answer is yes, it is perfectly viable to make a career out of online trading. However, that doesn’t mean it is necessarily easier to do or less work than any other full-time job.
Some of the benefits of forex trading as a career are that you are essentially your own boss and get to plan out your work schedule by what hours you want to work, what days you want to work and for how long. It is also easily accessible and with technology today, along with platforms and trading apps out there, you can do it from relatively anywhere at any time.
Be mindful and skeptical about anyone claiming to make a fortune on day trading, they are usually trying to sell you something. Don’t be fooled by the hype, there is truly no such thing as “easy money”.
But, if you search for it, there are definitely ways to make it easier. For example, if you live in a low-tax, low-cost country, you don’t need to make as much money to be profitable. It also makes a big difference if you cut down on your living costs because at the end of the day, if you plan to make a living online trading, that essentially means your income will cover your expenses.
Top Recommended Brokers For Beginners
Highlights Plus500 is a globally-regulated broker offering to trade on more than 2,500+ leveraged CFD instruments commission-free covering Forex, Commodities, Indices, Shares, Options and Cryptocurrencies.
Licenses ASIC, CySEC, FCA, FSB, ISA, MAS
Benefits vs Drawbacks
Although it does not come easy, there are definitely some benefits to making a living by online trading. Here are just a few of them:
- No Boss – No more catering to the demands of unreasonable bosses when you are your own boss. You can work any time, anywhere you’d like. It’s all up to you.
- Hours – It hasn’t always been this way, but in today’s trading world, the market is always open. You can choose the hours, however long or short, and work them around your own schedule to make it as convenient as possible. No need to go through the hassle of getting an approved vacation or dealing with HR, if you want a vacation, take one.
- Overheads – Forget about the costs of the train or bus to get to work. You no longer have to worry about gas or parking fees on a daily basis. All you need is a computer and solid internet connection, along with capital to start, and you can get going right away.
- Comfort – You can essentially “roll out of bed” and turn on your computer to get started. While the rest of the world is ironing their business clothes, you could be brewing your morning coffee and making your 15-foot commute to your workspace. No need to deal with crammed office space or distracting coworkers when you are working from the comfort of your own home.
While there are obvious allures to day trading, there are also some downsides like anything else. The most prevalent drawbacks are:
- Solitary Lifestyle – While you may be glad to not have to be bothered with office politics and colleagues driving you crazy, it’s not always a bad thing to have other people around. Working from home for any career has the potential to get very lonely. This can definitely be combatted with other social gatherings, family, friends, etc., but if you don’t like being alone the majority of the day, then maybe you should think twice about day trading as a career.
- Inconsistent Salary – There is never going to be consistency in your salary with day trading, it will have large fluctuations on a daily basis sometimes. You can go from making $3,000 one day to being down $2,500 the very next day. It is hard to rely on a salary when it’s as unstable as it tends to be in the trading market. It is also important to note that although you create your own schedule and work when you want to, taking a vacation also means you won’t make a penny during your time off.
- Career Progression – There is no “climbing the ladder” in this career, other than your earnings. It also may be relatively difficult to get back into the business world, or whichever occupation you held prior, once you take a significant time off. Some day traders even suggest you will become less employable as time goes on.
- The Battle Against Bots – It is no secret that algorithms, automated systems and bots are taking over the technical world, and the trading market is no different. These technologies are now responsible for more than 60% of all market volume. This is why it is so important to have a solid strategy that is continually evolving and growing with the market and things change. There will always be a need for humans in the trading market, but you will have to do your best to find ways to always adapt, evolve, and stay current with the news and trends to maintain an edge in the trading market.
What Are People Trading?
One of the first and most important decisions day traders need to make is what they want to start trading for a living. How do you decide? For those who day trade for a living, what are the most popular securities and markets?
- Penny stocks
If you are day trading penny stocks or currencies for a living, you potential profits are dependent on the volatility and volume in your chosen market. For example, the cryptocurrency market is highly volatile, allowing for many to make a very good living.
Day trading penny stocks for a living, however, could be much more challenging. The market is already saturated and a relatively high capital is required, which has the potential to make losses more financially devastating.
As stated before, day trading futures or commodities for a living has its own set of challenges. Effective strategies in these markets are especially important for future long-term success.
Geographical location and the chosen trading market can also depend on whether you find success in day trading. For example, if you were to take up day trading for a living in India, Indonesia or South Africa, there is a very low cost of living and they have a much more volatile market, which means making a living day trading in these locations is much more feasible.
However, making a living day trading in the UK, US, Canada or Singapore presents different challenges. There are plenty of opportunities in these locations, but they are combatted with an abundance of competition and a much higher cost of living. You will definitely need to sit down and come up with a strategic plan for a weekly or monthly average that you need to make in order to actually live, but once you have a solid plan you will find plenty of volume and volatility in these markets as well.
How To Make A Living As A Trader
Be very careful of potentially expensive obstacles you will need to overcome in order to make a significant living day trading. Below is a list we have compiled to keep you firmly in the black:
So, how do you actually get started if you want to take up day trading for a living? The answer is fundamentals. If you get the fundamentals right, you will be in the best financial position to make a fruitful profit and generous salary.
- Hardware – For the basics, you will need at least a mid-range internet connection and computer. You don’t want to take the potentially costly risk of your internet or computer crashing. It is highly suggested to have two computer monitors up and running in the event of an emergency, so you don’t lose everything.
- Broker – You should make sure you pick a broker that suits your needs and desired outcomes. Our greatest advice in this area is to look for competitive prices, reliable customer support, and a platform that is easy to navigate.
- Strategy – Pick the best strategy that fits your trading style. You should always rely on charts, patterns, and technical indicators because that enables you to make consistent profits on high volume, low-value trades.
Location can be key when it comes to Forex trading, so make sure you have a solid setup. Will you create a home office space or have a more transient trading space from your laptop in a number of different locations? You may be picturing in your head an image of a lone trader sitting behind 6 or 9 computer monitors tracking all sorts of data, but is that necessary? If you don’t have the ability or extra space to create a home office, one alternative is to look into options for rented desk space.
One potential option is a company called ETrading HQ that offers leased desk and office space along with day trading data and collaboration. This could be extremely beneficial to be around other like-minded traders for exchanging ideas and strategies face-to-face. In places like New York and London this type of business is booming and could make your aspirations of day trading for a living more attainable for those just starting out and concerned with market data, solitude and designated office space.
You may be asking yourself, ‘how much capital do I really need?’. It is one of the only requirements when day trading from home. A few years ago, you needed easily $25,000 just to get started trading in the US and always had to maintain at least that amount in your account.
Online trading for a living in those times, with such strict regulations, was not financially feasible for the majority of people. However, globalization in the financial industry has allowed day trading to be possible on many platforms outside of US regulation. In today’s trading world, you can start out with as little as $100 in your account.
How much capital you will end up needing depends on what exactly you want to start trading.
You are also going to need to utilize a wide range of resources if you intend on being successful day trading for a living. To your advantage, there are many free educational tools available at your disposal with just a few clicks of the mouse. Here are some of the most effective resources worth considering:
- Books – see our list of good reads, including easily accessible Google books.
- Ebooks – e.g. ‘new trading for a living ebook’, by Alexander Elder (hassle-free download)
- Tutorial videos
- Forums – ideal for those looking to start making a living day trading stocks, futures, forex, and cryptocurrencies.
- Study guides
- Podcasts & MP3s
Forums, blogs, and chatrooms are also all great ways to find advice from experienced traders. You can greatly benefit from detailed strategy books, PDFs or online tutorials/videos. There are also plenty of eBooks, epubs, and PDFs available for free download right to your Kindle or other electronic device.
If you’re looking for particular assistance on how to make a living day trading forex, consider the forex page. Additionally, see the stocks page if you’re interested in trading stocks from home for a living.
One of the most essential aspects of day trading for a living is to plan for how you will manage risk. As Larry Hite rightly asserted, “Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don’t take a hard look at risk, it will take you.”
You need to create a balanced system where you are able to retain enough capital to not have to go back to your day job and still have enough to make moves. The core components of a solid, balanced system are heavily influenced by stop-losses and take-profits.
- Stop-loss – This is simply the price at which you will sell a stock and take the loss. It will eradicate you holding on in hope that ‘it will come back.
- Take-profit – This is the point at which you will sell a stock and take the profit. This will help you retain that profit, by enabling you to sell before a period of consolidation kicks in.
You will need to keep your head in the game and be extremely disciplined if you intend on making consistent and stable profits day trading for a living. Victor Sperandeo highlighted, “The key to success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading.”
It may sound like a simple thing to do, but when you’ve got $2,500 on the line and you’re staring at the same computer screen for the last six hours, it may be more difficult that you might think. Try to employ as much technical help as possible to limit potential emotional liability.
This will not be a flawless process, so don’t be discouraged by making mistakes. You will most likely make more mistakes than you ever intended or prepared for, but it is normal, and it is critical to keep your emotions in check. One trick that has helped many traders is to keep your focus on the trade and not on the money, when money is on the line it has the tendency to create emotional reactions if you focus on the number too much. Take it from experienced trader Alexander Elder, “The goal of a successful trader is to make the best trades. Money is secondary.”
With the trading market on the rise and the number of people trading for a living continuing to increase since 2014, it is a very competitive market. Is it realistic? The answer to this question lies entirely in your ambition and commitment. This will definitely not be an easy ride, but if you can make it work with a suitable workspace, the right market and utilizing the tips mentioned in this article, you have the potential to be one of the triumphant few! Good Luck!