Day Trading Career: Are you thinking about changing careers? Maybe you saw an ad for Lambo online and decided to try it for a day.
2020 and 2021 have been two exciting years for the stock market. With everything going on around the world, many people have started day trading to supplement their income or have tried day trading as a possible skill for a full-time job.
I have been a day trader for over 7 years now. And let me tell you, starting this career is not as easy as just loading up Robinhood, depositing $100, and hitting buy, ready to fund your account on the moon.
I wish it were that easy. In this article, I will share with you 4 essential steps that will help you start your daily business. It is a process that requires careful planning to make this big step the right way.
Keep Your Current Job
The first step to starting your own day trading business is to keep your current job. This is an essential foundation for everything we are building here. Please do not immediately quit your job while day trading. It doesn’t matter if you work part-time or full-time. If you hate your boss, co-workers, or job, please keep your job.
You will need this income to support yourself for the next 6 months or next year while you start day trading. A stable income you can tally on will give you the peace of mind to take things slow and allow you to learn the basics of risk management and all the trading strategies.
Many people abruptly quit their jobs and only 100% appreciate that they can start day trading for a living right after seeing some get-rich-quick schemes online. Unfortunately, if you do this as a new trader, you will end your day trading before you start.[1]
Keep in mind: Just because you can download a day trading program like Robinhood in 2 minutes does not mean you can start making money trading in 2 weeks or 2 months.
Yes, it may be torture to go to a job you hate for another 6 months; trust me, I have to do it. Trust me when I say the short-term sacrifice is worth the long-term reward.
Start Learning to Day Trade
Now that we have done one step let’s move on to step two, which is to start learning how to trade day. I have done many videos on this topic, specifically on what new day traders should focus on when they start day trading from scratch, but let me summarize it here in a quick start mode.
Practice the Basics
First, you must start trading with a paper trading account with brokers like Thinkorswim, Interactive Brokers or Webull. Don’t risk your hard-earned money right away.
Then, while you practice with this integrated trading account, start learning charts, technical analysis, and all the necessities for buying and selling stocks with free online resources.
Don’t forget to track and record your trading results during this time. It doesn’t matter if it’s paper trading or not. For regular traders, it’s essential to understand your position. And understand the trading strategies and risk profiles most suitable for their trading accounts.
Join a Community
If you have spent a few weeks or a few months paper trading and studying free resources, and if you have decided that day trading is something you want to focus on, then it is time to write it down systematically. A day trading training program like Humble Trader Academy.
You can’t put a roof on your house until you have a solid foundation, just like you can’t start growing a business until you learn how to manage risk, analyze stocks, and track your data with different trading strategies.
If you want to learn the details of these steps for beginners on how to start a day trading business, I even made a special video about it. Feel free to watch the video later on my YouTube channel.
Track Your Finances
Now, let’s move on to step three. This is perhaps one of the most important steps to a full-fledged business – getting started with your finances.
Since the goal is to leave your current job to change careers eventually, it is important to calculate your monthly expenses and figure out exactly how much money you need to save to live comfortably for at least 1 year after leaving your job without relying on income from day trading.
How much should you save for rent, food, utilities, and transportation? Do you keep track of all the money you earn each month from work and all your expenses paid in cash or with credit cards?
Many people can talk about Excel spreadsheets, complicated charts, and the like, but not me. I see an Excel spreadsheet, and it immediately gives me a headache.
Budget and Expense Tracker
I like to keep everything organized and as free as possible. I use a personal budget and a free expense tracker like Mint by Intuit to track all my monthly expenses. So, I link the app to my credit cards and bank accounts.
Then, the site automatically updates all the expenses and sorts them weekly. The only form of payment they do not accept is cash. This requires manual entry from the user. For this reason, I never pay money for anything.
Plenty of other websites and apps allow you to track your personal expenses. It doesn’t matter if you use an automated tracking system or a DIY Excel spreadsheet format like I do. The main thing is that you do what is easiest to break down all your expenses. After that, we can adjust the numbers.
Personal Budget (Monthly)
I remember when I was about to quit my job to start a full-time business many years ago, my expenses were as follows:
Every month, I spent about $800 on rent, $200 on restaurants, $150 on groceries, $100 on gas, $200 on car rental, $100 on student loans, and about $200 a month on other expenses. Surprise.[2]
That adds up to $1,750 a month in monthly living expenses. Keep in mind, that was over 6 years ago. That’s why all the numbers here seem too cheap to be true. Take inflation into account each year. 2022 that number will likely be closer to $2,000 a month.
It also helped that I was single and graduated from college in my early twenties. Life was simpler back then, and I didn’t have kids and yeah, I don’t think anyone would be surprised if I just slept on a mattress on the floor.
I was into this minimalism thing years ago, before it was cool in 2021.
Yeah, the rent in the city was only $800 because I was living in a two-bedroom apartment with two other people. If you want to save money and build a runway to turn into a full-time business, you will have to do whatever it takes.
Personal Budget (Yearly)
Now that we have our monthly expenses at $1,750, we can get our cost of living for one year. $1,750 multiplied by 12 equals $21,000. To be safe, I’ve reduced the amount to $25,000 to leave some cushion in my budget.
If you follow all the steps we just discussed and your monthly expenses, you should be able to calculate your living expenses for one year to save in your bank account.
I said to keep these savings in your bank account, not your business account. You shouldn’t trade the money you have to live on for the next 12 months because that would be very risky.
Your living expenses are not included in your business account because we need to maintain a steady source of income from your work in the first place. That way, you don’t have to rely on the business to pay for your food and rent immediately.
Having 12 months of financial statements in your bank account, safely tucked away, with no market and reasonable risks.
Let’s be honest: we regular traders sometimes do emotional and stupid things. The only way to protect and follow risk management and trading plans is to separate ourselves from our money and minimize losses.
So, $25,000 was the amount I needed to put into my bank account and my job income before I quit my 9-7 job and started day trading.
You might be looking at your numbers now and thinking that this is impossible and you will never achieve it, but it all adds up.
Be proactive; if you want that bad day of work, you’ll find a way to do it. If tracking that budget and saving seems like a big deal, then they won’t be in business for a day. Just buy and HODL, as the cool kids say.
Quit Your Job
Now, if you’ve gone through steps 1 through 3, you’ve learned about free day trading and premium resources, how to find your business, become profitable over time, and save 1 year’s worth of living expenses. Now, it’s finally time for the fun part.
Go to your boss’s office and put.
Okay, just kidding. I didn’t take that approach. I like to keep things low-key. Also, I suggest you make sure you can return to that job as a backup plan if day trading doesn’t work out.
Again, the same idea applies to justifying saving a year’s worth of living expenses from your business account. Everything here is to give you some emotional security so you don’t have to start your full-time trading business under pressure.
Before I officially quit my job, I would take short breaks, like in the middle of the workweek for 2 days, sometimes 5 days. During those two days off, I would wake up and go about my day as if I had already had an entire workday.
This way, I could fully experience the routine of going to bed early, planning trades before entering the market, and entering trades mid-day and during the electric hour. I saw if I enjoyed the lifestyle I had been fighting for.
I would have used my limited vacation time for this, but these little experiments are worth it. Having fewer full-time workdays has motivated me to keep the flow of my daily business travel while saving on living expenses.
Planning to leave my job and start a full-time business took a year and a half, if not more.
Conclusion
As I said at the beginning of this article, just because a day trading app is easy to download in 2 minutes doesn’t mean you can start day trading in 2 days or even 2 months.
I read this great quote online, and it still resonates with me. “Learning business means living a few years of your life in a way most people don’t so you can live the rest of your life in a way most people can’t.”
As I said, it all comes down to sacrifice. Do you want it badly enough? That might mean taking fewer classes on the weekends, eating out once or twice a week, only sleeping six hours a day, and only having one friend.
Day trading is a thorny path, but it is gratifying. I hope the process explained in this article will help you prepare for a full-time business career.