Day-Trading: Is It a Realistic Business?

Jarratt Davis

Special Consultant to the FPA
In the last post I discussed what to expect when you choose trading as a profession, and in this post I will touch upon whether or not day-trading is a viable business.

The internet is full of get-rich-quick promises and investment “professionals” stating that day-trading is “a losing game”. Who should you believe and what is the truth about day-trading for a living?

The fact is that there are people who make their living from day-trading the financial markets. There are also more people who lose their entire investment very quickly from this activity.

So why do the winners win and the losers lose? And what is a sensible strategy for ensuring that you are a winner and that you consistently profit from your day-trading business?

Day-Trading: Why Losers Lose

Most people wipe out their accounts in what often appears to be a prolific event. But most of these people are making the same common mistakes over and over again.

These include basic things like risking far too much out of pure greed and trading in an inconsistent manner. This means that they only stick with a strategy long enough for it to produce a slight loss. They then move on and repeat this cycle.

These things will kill any trader – no matter how good they are or what they know about the markets.

Have you experienced losses in the past and wondering why this is? Look at your habits and assess what actually happened to your account.

Blew up relatively quickly and your account is empty? You were using too much leverage.

If your account seems to be bleeding a slow, painful death, then your risk is probably not too much of an issue. It could mean, however, that you are trading too inconsistently and swapping trading systems far too frequently. Either that or you are trading an ineffective method which hasn’t been correctly tested and proven.

Fortunately, with the right training and guidance, all of these things are fairly easy to resolve.

Day-Trading: Why Winners Win

The winners, of course, have already solved the issues that the losers face. They pay consistent attention to what is going on in the market as a whole.

If, for example, a trader has a strategy that is signalling a long position in the market, but the fundamentals are clearly showing that the sentiment could be bearish very soon, discretion would help to avoid that possibly negative trade in the first place.

Another thing to realise is that just because you are a ‘day-trader’ it doesn’t mean that you must trade dozens of times during a day. It will generally lead to you losing money because high probability opportunities do not set up anywhere near that frequently. Moreover, lower probability trades will simply yield more losses and reduce your account quicker.

Focus on Quality above Volume

Each day, look at the news due to be released and try to spot potential market-moving events that can be confirmed with technical entries. This will give you the best chance of making a profit on your trade.

The most important thing to take away from this post is to avoid the common mistakes mentioned above and prevent yourself from over-trading. These mistakes will almost certainly bring your day-trading career to an end before it has even begun.

P.S. – If you want to learn more about how I day-trade, click here for my Trader Training Programme


Day trading is Profitable if:

Trades are done as per a trading plan.

You are getting out of the wrong trades with appropriate loss.

Try to maximize the profit in the right trades. This can be done by using trailing stop loss in a right manner.

Keep trade size comfortable with your trading capital and mindset.

It should done as serious business with due respect to loss-making trades. Losses are to be treated with a trade plan and not emotionally.

Every day will not be profitable. Do not expect and hope for it.