If you are a veteran profitable daytrader, you may not have to read this. But if you are one of the many new fresh blood that are trying to learn how to daytrade this post is for you. The goal of daytrading is simply to make money! Learn how to trade the markets wisely and you can be set for life being your own boss working conveniently at home. Answer to no one except the trading gods and you will never have to pull a work all-nighter ever again. How long does it take for a newbie to make consistent money daytrading?
The answer varies by individual of course, but to give you a ballpark idea, it took me SIX months. When I started my career on Wall Street, I sat in front of my ILX quotron and NYSE DOT machine and experimented with all different types of trades -- long trades, short trades, trade with the trend trades, trade against the trend trades. I didn't know what to trade each day because I was not familiar with any of the stock tickers. I had no clue what kind of business or industry each stock ticker represented. And I was a Biology/Genetics major in college and not a Finance or Accounting major. Honestly, 90% of the time I had no idea what I was trading. However over time I learned how stock ticker $XYZ acted, whether it was a wild swinging fast-moving stock or a slow non-volatile one. Daytrading really isn't about understanding the fundamentals of a company inside and out. It's understanding the mechanics of buying and selling in that stock that day -- figuring out if there will be more aggressive buyers or more aggressive sellers and then taking a position from there.
For the first 3 months as a beginner prop trader at Worldco, I lost money each week. I saw my $25,000 account shrivel down to $10,000. Was I discouraged? Yes of course. It felt like I had no reason to be here. I just got preyed upon most days. It's kind of ironic to say this but the key to learning how to daytrade is by losing money, as long as you understand why you were red in the trade. It's just as important to also understand why you made money in a trade too. When you start out in this business, losing money teaches you very valuable information on what not to do next time. It helps you develop your own trading rules to follow by.
The hundreds of losing trades over these first 3 months taught me a lot. And with the words of advice from the veteran traders at Worldco with decades of experience, something clicked and I started to end green each day. After 6 months, I dug myself out of my hole and started taking a paycheck home every two weeks on payday. I collected 90% of my trading profits back then (and eventually 99.9%). From there, my earnings grew each month until I was making 7-figures at the age of 26.
I have seen people turn profitable in as little as a month as compared to my 6 months. I have also witnessed a case where a guy lost all his money in the first two weeks but kept coming to the office doing nothing in front of his computer. Someone finally asked the guy after a couple days later "Why are you still here?". The guy replied "Because I am embarrassed to tell my wife that I lost everything."
Daytrading is a jungle at first. You don't know where you are. You don't have any friends. And you certainly have no idea what you will encounter at first. But if you can survive, the rewards are big. I am a living example. Don't get discouraged in the beginning. Keep your hopes high and let your mind and trades do your talking.
- Hubert Tsai