Who is the best day trader?

Table of Contents

What is a day trader?

A day trader is an individual who actively buys and sells securities within the same trading day, closing out all trades before the market closes. Day traders typically trade stocks, options, currencies, and commodities. They aim to take advantage of small intraday price movements in volatile markets. Day trading requires in-depth knowledge of technical analysis, the ability to react quickly to market moves, and a high-risk tolerance. Successful day traders are able to make quick decisions and manage risks. They often use leverage to take larger position sizes. Day traders close all trades within the day to avoid overnight risk exposure.

What are the main advantages of day trading?

There are several potential advantages to day trading:

Opportunity to profit from intraday volatility – Day traders can capitalize on price fluctuations throughout the day.

Avoid overnight risk – By closing positions each day, day traders do not face gaps or extended hours volatility.
High liquidity – Frequent trading means day traders can enter and exit positions easily.
Diversification – Traders can spread risk across multiple instruments and asset classes.

No position holding costs – Day traders do not face overnight financing costs or interest.
Control over trades – Active position management means traders can respond swiftly to market moves.

The potential to profit from short-term moves and the ability to avoid overnight risk exposure make day trading appealing to some investors. However, it also comes with downsides like high costs, significant risks, and inconsistent returns.

What are the main disadvantages of day trading?

Day trading also has some potential disadvantages including:

High costs – The frequent buying and selling leads to increased transaction fees and commissions.
Significant risks – Intraday volatility means large losses can accumulate quickly.

Requires constant monitoring – Traders must watch positions continuously during market hours.
Unstable income – Performance can vary dramatically day-to-day.
High-stress environment – Day traders face pressure from continuous decision making.

No fundamental backing – Intraday price moves may not reflect asset values.

The costs, risks and effort required means day trading is not suitable for everyone. Traders must have discipline, experience and sufficient capital to absorb potential losses.

What skills make a successful day trader?

To succeed at day trading usually requires the following skills:

In-depth market knowledge – Understanding how markets function and the factors that drive volatility.
Charting and technical analysis – Analyzing price charts to identify trends, patterns and indicators.
Discipline – Adhering strictly to strategy rules, risk limits and prudent position sizing.

Agility and speed – Rapidly executing trades while prices are still favorable.
Calmness under pressure – Making rational decisions amidst the intraday volatility.
Risk management – Managing risks across positions and implementing stop losses.

Mastering the mental abilities of day trading can take experience and practice. Developing an edge in reading market conditions is also key to stacking the odds in your favor.

What trading strategies are commonly used in day trading?

Some of the most common day trading strategies include:

Scalping – Taking small gains on many fast trades, aiming to accumulate profits.

Range trading – Identifying support and resistance levels and buying at the low end while shorting at the high end.
News-based trading – Capitalizing on gaps, breakouts and high volatility around news events.
High-frequency trading – Using algorithms to exploit market inefficiencies with rapid executions.

Momentum trading – Going long assets with positive momentum and shorting those in downtrends.
Chart patterns – Trading based on technical chart formations like head and shoulders, flags, triangles.

Having a defined edge, whether it’s high-speed arbitrage, technical indicators, or understanding order flow, can help day traders execute their chosen strategies successfully.

What tools and platforms do day traders require?

Day traders typically require the following tools and platforms:

Direct market access – Electronic trading platforms with Level 2 quotes and order entry hotkeys.
Charting software – Programs for visualizing real-time price action and indicators.

News feeds – Sources for earnings, economic data and breaking announcements.
Multiple monitors – Allow simultaneous tracking of charts, newswires and order platforms.
Powerful computer – Fast processor and high RAM to support real-time data feeds.

Backtesting platform – Simulating strategy performance on historical data.

The best day trading setup allows reacting to the markets in real-time with fast order execution. Many traders also use automation and algorithms. But human discretion in decision making still remains important.

What are the typical work hours and lifestyle of a day trader?

Most active day traders work hours that coincide with the regular market session:

Pre-market preparation from 8-9 AM.
Trading from market open at 9:30 AM to close at 4 PM.
After hours from 4-5 PM to analyze performance.

Additional hours are often required for activities like research and strategy development. The intensive hours and sitting require stamina. The lifestyle involves:

High focus – Carefully observing markets and managing risks.
Constant learning – Keeping up with changing market conditions.

Sitting for long hours – Watching multiple screens with few breaks.
Stress management – Coping with pressure from risk exposure.
Work-life balance – Managing the demands alongside relationships and interests.

Flexible schedule – Some freedom to choose hours outside of market time.

The intensive nature of day trading makes work-life balance and stress management skills important. But the potential income and flexible schedule outside of market hours appeal to some traders.

What are the income earning potentials in day trading?

The income potential in day trading depends significantly on a trader’s skill, risk tolerance and market conditions. Some key income factors:

Highly skilled traders can potentially make over $100,000 per year.
However, many active traders suffer losses or make no profit at all.
Day trading is risky and challenging even for experienced investors.

Profitable traders exhibit strong risk management and psychological abilities.
Income potential is higher in volatile markets with greater price swings.
Traders must pay fees and commissions that affect net profits.

While day trading income has potential, consistency is difficult. Traders should not expect to profit daily or even monthly. Having realistic expectations and sufficient capital is key. For most, returns from day trading are lower than from long-term investing.

What are the common mistakes beginner day traders make?

Some frequent mistakes beginner day traders make are:

Trading without a tested strategy – Buying randomly based on hunches.

Overtrading – Placing too many trades without a proven edge.
Poor risk management – Risking too much capital per trade.
Not using stop losses – Failing to limit downside on losing positions.

Revenge trading – Chasing losses by deviating from trading plan.
Lack of discipline – Not sticking to predefined strategy rules.
Unrealistic expectations – Expecting too much too soon.

Controlling emotions, following rules, managing risk and gaining experience rather than seeking big wins quickly can help novice traders avoid common pitfalls.

What risks are involved in day trading?

Some notable risks of active day trading include:

Monetary loss – Potential for large losses due to high intraday volatility.

Overleveraging – Excessive risk taking can amplify losses.
Liquidity risk – Being unable to exit positions at favorable prices.
Gaps in price – Overnight price jumps can lead to negative surprises.

Compliance issues – Violating trading rules such as the pattern day trader rule.
Stress and burnout – Pressure to meet daily income targets.
Tax complications – More complex filing from high transaction frequency.

Thorough risk management practices, discipline and maintaining a long-term perspective help mitigate these risks. Most advise trading with limited capital until consistently profitable.

Who are some of the most successful day traders?

Here are some of the day traders with reputations as being among the most successful:

Name	Performance Highlights
Timothy Sykes	– Turned $12,000 inheritance into over $4 million in trading profits.
Ross Cameron	– Reportedly made over $7 million in trading profits.
Kunal Desai	– Claims to have made millions in profits from small account.
Michele Koenig	– One of the few female top traders. Left career in finance to trade full time.
Marc Rubinstein	– Former hedge fund manager. Reportedly trades his own seven-figure account profitably.

However, verified long-term track records for day traders are rare. Some focus on selling training materials or generate income through video monetization rather than actual trading. Claims of million dollar profits should be scrutinized.

What are some day trading success stories?

There are a few frequently cited examples of successful day traders:

Jesse Livermore shorted the 1929 crash and made $100 million.
Richard Dennis turned $1600 into $200 million in the 1970’s-80’s.

Steve Cohen averaged returns of 30% as founder of hedge fund SAC Capital.
Paul Tudor Jones is a billionaire from short term technical trading since the 1980’s.
Ray Dalio runs the world’s largest hedge fund Bridgewater which performs short term strategies.

George Soros gained over $1 billion betting against the British pound in 1992.

However, most of these traders have employed teams of analysts, used algorithms, or traded options and futures as well as stocks. Truly successful day trading long term is still considered rare. Traders may do well in some years but struggle to sustain it.

What are the paths to becoming a professional day trader?

Typical steps to pursuing day trading professionally include:

Practice extensively with a paper trading account and small position sizes.
Develop a trading strategy with clear rules, a sound premise, and positive backtesting results.
Start trading small position sizes in real markets while still maintaining another job.

Request level II direct access quotes and order entry hotkeys from your broker.
Leave your job and pursue trading full time once you achieve consistency.
Obtain sufficient capital, likely $50,000+ for day trading margins and risk management.

Continue practicing patience, discipline and managing risks as you scale your activity.

Becoming a profitable professional day trader requires tremendous skill. It is essential to do extensive preparation before committing significant capital. Expect long hours, high-stress and several years of honing your abilities.

Conclusion

In summary, day trading offers potential income but requires in-depth knowledge, experience and risk control. Traders must be decisive yet extremely disciplined to thrive in the high-stress, volatile environment of intraday markets. Achieving consistent profitability is challenging. While major success stories exist, long-term success rates for day traders remain low. Passion for the markets, comfort with risks and a rational outlook are needed to pursue day trading professionally. With the right abilities, it offers a career combining potential upside with a flexible, autonomous work schedule. However, achieving reliable profits trading on short term price action continues to be extremely difficult for most who attempt it.