Day trading is a lucrative way to create income and lifestyle flexibility. This makes day trading as a career choice seem almost too good to be true. Many wonder what day trading means, and how a person can get started earning income with day trading. In this article, I’ll answer these questions and share key moments from my own journey with day trading.

What is Day Trading?

Day trading is the act of opening and closing a trading position within the same day (meaning no overnight holding of a position). For example, you buy 10 shares of $AAPL at 10AM in the morning, and at 11AM you sell those 10 shares back to the market. That is a day trade. Similarly, you can short 10 shares of $MSFT at 2PM in the afternoon, and at 3:30PM you buy those shares back from the market. That is also a day trade.

The barriers to entry for day trading are almost negligible. Anyone can open a brokerage account, fund the account, and start trading within a matter of minutes. All that is required is a deposit of capital (money) and signature of brokerage agreements. Then you’re free to buy and sell available instruments (a stock, bond, or option/future contract are examples of instruments).

While retail day trading has been going on for decades, it rose in popularity during the height of the COVID-19 pandemic. The stay-at-home restrictions of the pandemic impacted both supply chain infrastructure and consumer demand in the most extreme manner. Consumers were panicked and scrambled to procure essential supplies, regardless of price. After households were stocked up, consumers began to crave entertainment. Aside from sourdough bread-making, day trading, too, became an entertaining activity.

But what first started as entertainment, turned into a frenzy. Companies had increased their prices due to supply chain restrictions, but consumers were undeterred. Demand remained strong as many products were perceived as invaluable. Company profits and valuations responded in effect, elevating higher and higher. The stock market became “easy money” as it really seemed like everything was “going up” all the time. Many individuals who had success shared their results on social media, and some even quit their normal jobs.

This is how day trading became popular in the retail space. Retail day trading is day trading performed by a person who has less capital than both institutional investors and high net worth individuals (having $1,000,000 net worth or higher). By definition, I currently am an example of a retail day trader.

How to Get Started with Day Trading

I started my day trading journey in February of 2022, during the untimely transition from an expansionary economy to a contractionary economy. Learning in this environment was challenging. Formal and professional mentorship for day trading is a scarce and costly resource. The internet is rife with cheaper and less formal formats for learning the craft of day trading. Like many retail traders, this was how I got started. This approach was a detriment to my long-term goal, rather than a benefit. Instead, my biggest assets to learning have been time spent observing the market and repeated low-risk, deliberate practice.

How to get started with day trading is one of the most common questions asked by many. Often, the people asking this question work in demanding industries. They are exhausted and unfulfilled. The allure of day trading is no farce – the flexibility and income potential are real. There is a catch, however; the career benefits aren’t realized any sooner than they are with any other craft.

What does that mean? It means if you want to earn a multiple 6-figure, or even 7-figure, income from trading while also having abundant time flexibility, expect to put in 7 years of work beforehand. Specifically, if you are someone who has zero experience in the financial markets, as was the case for me when I started trading.

Your first 2-3 years should be spent familiarizing yourself with the tools and environment of your trading instrument(s). Tools include online brokerage accounts and charting software. Become comfortable with one specific broker and/or charting platform. Some traders utilize their brokerage’s software for both charting and order execution This is how I operate my trading activities. Other traders use their brokerage’s software for order execution and a separate software provider for chart analysis.

The purpose of these first few years is to understand the instrument(s) that you are trading. This requires study of market mechanics, including real-time recognition of supply and demand signals. These are the studies of fundamental and technical analyses. A thorough comprehension of market sentiment is just as important as the ability to appropriately respond to data in real-time. This is also known as risk management.

Years 3-7 of your career should be spent deliberately practicing the successful blending of the aforementioned skills. Though it may sound tedious, I assure you in practicum it is not. For equities, market conditions change roughly every 6-8 weeks. Some days equities seem like they are flying up. Other days equities seem like they are falling uncontrollably. And yet still, there are many days where it seems like everything is moving all at once in both directions until it all just stalls out flat.

Rarely do you get the same market twice. Each day will have its own nuances. The periodic micro-shifts in market environments will expose you to variations of market moves that you thought you knew well enough. That is why strong foundational skills in both signal recognition and sentiment comprehension are critical. Years 3-7 are where you practice successfully executing these skills in all manner of market shifts. This helps reinforce elements that are reliable, and cull those that are not. These include criteria, signals, and your own behaviors.

Your first three years are critical, and the next 3-4 years are exciting. As you apply your foundational knowledge to the markets, it is common to see consistent profitability. This is what you worked and studied for! The fruits of your labor begin to show in promise, giving your morale the traction it desperately needs. The benefits of income and flexibility become more consistent and present in your life.

You may be wondering, “Why seven years?” You may even disagree with that timeline. Maybe you have seen others on social media report achieving multiple 6-figure income in a shorter time frame. It’s not impossible, and certainly has happened. Yet, there is a specific phenomenon that occurs within the initial 7 year period for those individuals. I’ll share with you why seven years is the magic number, and why your favorite social media trading guru may not be telling the whole story.

Why Day Trading Takes Years to Master

*Disclaimer: I make no money from the following book links. I simply believe they are valuable books and should be read.

Seven is the magic number according to the vast field of cognitive research. In short, our brains are biologically hard-wired by millions of years of evolution to digest and master a craft. The caveat requirement of this process is the application of deliberate practice of the skill to be mastered. This finding regarding deliberate practice is highlighted by Geoff Colvin in his book Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else.

Similarly, in his book Mastery, author Robert Greene explains in great detail the intricate process of mastering a craft. His research estimates 7-10 years for an individual to graduate into mastery. The book Outliers: The Story of Success by Malcolm Gladwell surmised an estimate of 10,000 hours is required for mastery, and translated these hours into roughly 5-7 years of practice.

These authors based their statements on both historical and contemporary cognitive research. It is reasonable to assume seven years as an initial timeline for significant competency of a craft. In our case, that includes day trading.

So what about those social media stars who made millions in less than a year, or just a few years? I implore you to either review their social media history or inquire of them directly: around the 3-4 year milestone in their trading journey, did they have to ditch their old “strategy” and redevelop a trading method all over again?

Odds are, if they had early wild success, they most likely experienced this declination and breakdown in their trading performance. Next, see if you can find social media documentation (or directly ask!) of their messaging around the 8-10 year mark in their trading journey. Their content most likely centers around statements like “this is all you need to know”, or “here are the basics that always work”.

Popular traders 8-10 years into their trading journey are likely to share valid methods and truths with their audience. This is because their experience correlates with the timeline for craft mastery that we’ve discussed (7-ish years). They have likely mastered the basics of day trading, which increases their odds of being consistently profitable in their instrument markets.

Is Day Trading Possible?

Absolutely. What makes day trading a skeptic’s favorite topic is the vast amount of misinformation surrounding this career path. Traditionally, it was mostly accessible via institutional investing and trading firms. In recent years, online brokerage trading accounts have expanded the possibility for retail individuals to day trade. The largest gap that exists now is formal education and mentorship. As stated previously, this is a scarce and costly resource.

The factors that determine an individual’s success in becoming a day trader are neither mysterious nor mythical. Like any other complex craft, day trading as a career requires thousands of hours of deliberate practice. Consistent immersion and exposure to market fundamentals coupled with technical skill repetition are mandatory. Most importantly, setting the correct expectation is key to either optimizing or hindering your trading journey.

Watch the markets, practice your skills in a safe manner or environment, and continue to seek reputable knowledge sources. Books, professional social networks, and verified mentorship are sources to incorporate into your journey. As always, if you have any further questions about day trading, I’m happy to discuss them with you.

Legal Disclaimer: All content and statements provided are for informational purposes only and are not investment advice. The statements herein are the opinion of the author only. The author is not responsible for readers’ financial nor personal investment decisions. All information should be individually and independently evaluated prior to making financial investing and trading decisions.

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