Should You Quit Your Job to Trade Stocks? (2024)

Trading is often viewed as a high barrier-to-entry profession, but this is simply not the case in today's economy. Now, as long as you have both ambition and patience you can trade for a living, even with little to no money.

Sound fantastic? It is, and there are so many options available to people with the desire to put in the time to learn.

Key Takeaways

  • Trading is often viewed as a high barrier-to-entry profession, but as long as you have both ambition and patience, you can trade for a living (even with little to no money).
  • Trading can become a full-time career opportunity, a part-time opportunity, or just a way to generate supplemental income.
  • One option is to trade from home; however, this option can have high barriers to entry because the minimum equity requirement for a trader who is designated as a pattern day trader is $25,000.
  • Another option is to work for aproprietarytrading firm as a contractor; with this option, you will receive no wages or perks—just a share of the profits made from trading whatever the firm is into.

A New Era of Trading

Changes in technology, plus increasing volumes on the exchanges, have brought about several very low barriers-to-entry trading careers. In some cases, no personal capital is required. In other cases, only a small amount of capital will be required to get you started (and it will be used as a way of verifying your commitment to trading).

With global markets so interlinked, it's always open trading time somewhere around the globe, and many of these international markets can be accessed with relative ease. This means that even people who have full-time jobs or children at home can trade—it is just a matter of finding the right market and opportunity for you.

This is not to say that trading is an easy business; it can be very difficult. With so many routes, anybody can enter the market, but your ultimate success depends on you. Depending on the route that you choose, trading can become a full-time career opportunity, a part-time opportunity, or just a way to generate supplemental income.

People often think that full-time traders with advanced degrees and a high pedigree only work for investment banks. Equally as common is the thought that, to trade, you need large amounts of capital and expendable time.

It is probably true that to work for an investment bank, or to walk onto a major institutional trading floor, you will need to have connections or a prominent educational background that sets you apart. However, in this article, we will focus on how the average person, with either extensive or very little trading experience, can enter into the arena of trading and creating wealth.

Trade From Home

The first option, and likely the easiest because it is so flexible and can be molded around daily life, is trading from home. However, day trading stocks from home is also one of the most capital-intensive arenas. This is because the minimum equity requirement for a trader who is designated as a pattern day trader is $25,000, and this amount must be maintained at all times. If the trader's account falls below this minimum, they will not be permitted to day trade until the minimum equity level is restored (either by depositing cash or securities).

Consider Markets That Require Less Capital

Currency Markets

Therefore, potential traders should be aware of the other options, including markets that require less capital and have lower barriers to entry. The foreign exchange (forex) or currency markets offer such an alternative. Accounts can be opened for as little as $100 and, with leverage, a large amount of capital can be controlled with this small amount of money. This market is open 24 hours a day during the week and thus provides an alternative to those who cannot trade during regular market hours.

Contract for Difference (CFD) Market

The contract for difference (CFD) market has also expanded. A CFD is an electronic agreement between two parties that doesn't involve ownership of the underlying asset. This allows gains to be captured for a fraction of the cost of owning the asset.

As with the forex market, the CFD market provides high leverage, which means that smaller amounts of capital are needed to enter the market. The stock market can also be traded using a CFD. While the stock is never owned, the contract allows profits and losses to be reaped from speculating on the underlying stocks or indexes by mirroring its movement.

High leverage does mean higher risk; if a trader does not have a large amount of capital, this market can still be entered with very low barriers. Educating yourself on the risks involved and building a strong trading plan are absolute musts before partaking in any trading activity, but when you're highly leveraged, it becomes even more paramount.

Proprietary Trading Firms

Proprietary trading firms have become very attractive with their training programs and low-fee structures. If the idea of trading from home does not appeal to you, working on a trading floor might. A day trader working for aproprietarytrading firm is typically a contractor, not an employee.

They receive no wages or perks—just a share of the profits made from trading whatever the firm is into. The trader is provided with company capital (or leveraged capital) to trade (and the risk is partially managed by the firm). While personal discipline is still very necessary, trading for a firm takes some of the weight off of a trader's shoulders.

Working for a firm may also require working in an office during market hours, although some firms allow traders to trade remotely from home. The benefits of working with a trading firm can include free training, being surrounded by other successful traders, exposure to innovative trading ideas, greatly reduced fees andcommissions, access to capital, and performance monitoring.

There are generally three types of trading methods: fundamental, technical, and quantitative.

Many proprietary trading firms will accept people who have shown initiative in their backgrounds and have some education in their prior field. This is because the firm can monitor a trader's risk, and those not showing promise can be released with very little overall loss to the firm.

Payment in a firm like this is based on performance; it is normally a percentage payout of your net profits after fees. Some licensing may be required; this depends on the structure of the company. Even if it's not a requirement, passing the Series 7 exam will mean that there are more firms with whom you are available to trade.

Each firm operates a little differently, so find one that suits your needs, personality, and circ*mstances. Some require you to use some of your own capital. If you run a search for a list of proprietary trading firms, you will be able to see what is available to you.

Why Do You Need $25,000 to Day Trade?

Simply put, you need $25,000 to day trade because it is a regulatory requirement set by the Financial Industry Regulatory Authority (FINRA). This is specific to trading in a margin account for pattern day traders. FINRA established this rule because trading can be high risk, especially day trading, and particularly trading on margin because profits and losses are amplified. The implementation is to protect traders from losing large amounts of money.

What Is the Success Rate of Day Traders?

The success rate of day traders can greatly vary depending on the trader, the strategy implemented, and the securities traded. The success rate as estimated by some sources ranges between 1% and 20%.

Can You Trade Stocks From Home?

Yes, you can trade stocks from home. Today, with the Internet and most brokers having online websites and tools, you can simply create an account at an online broker, login, and buy and sell stocks from home or even on the go.

The Bottom Line

Once you've decided which trading method fits you the best, the next step is crucial. If trading from home is the main interest, you must decide what markets you will trade in based on your capital and interests.

You must then make a comprehensive trading plan—which is also a business plan because trading is now your business—and decide how you will operate as a trader. Next, explore different online brokers and compare what they offer. Seek out a mentor or someone to help you. Thenit is time to start trading.

Should You Quit Your Job to Trade Stocks? (2024)

FAQs

Should I quit my job and become a trader? ›

The answer depends on your individual circ*mstances and goals. If you have significant savings, a solid understanding of the market, and a proven track record of successful trades, quitting your job to trade in the stock market may be a viable option.

How much money do day traders with $10,000 accounts make per day on average? ›

On average, day traders with $10,000 accounts can make $200-$600 per day, with skilled traders aiming for 2%-5% returns daily.

What percent of traders quit? ›

It is estimated that 80% of day traders quit within the first two years, and nearly 40% quit within one month. After three years, only 13% remain, and after five years, only 7% remain. The average individual investor underperforms the market by 1.5% per year, while active day traders underperform by 6.5% annually.

Is stock trading a stressful job? ›

It's stressful, but it doesn't make you kill people.” “The successful people who do this don't always want to win,” said Stephen Boren, a psychologist who dabbles in day trading at Net Trade and has been studying what makes a successful day trader. “They want to master a skill. It's a stressful profession.

What is the average lifespan of a trader? ›

"If you're not producing," says Handa, "you're gone." The average professional life-span of a trader, says Handa, is from 2 to 5 years. After that, many of them end up becoming trading managers or go to a different division of the bank.

Is 30 too old to become a trader? ›

Absolutely. In fact, a good fraction of quantitative analysts, traders and developers make the change to finance only in their late twenties or early-to-mid thirties.

Why do 90% of traders lose? ›

Most traders fail because they do not invest enough time and effort in learning about the markets and trading strategies. They enter the market without a proper plan or strategy, which leads them to make poor decisions and lose money. Another reason why traders lose money is because of emotional decisions.

Why do most people fail at trading? ›

Poor Risk and Money Management: Traders should put as much focus on risk management as they do on developing strategy. Some naive individuals will trade without protection and abstain from using stop losses and similar tactics in fear of being stopped out too early.

Why do 95% of day traders fail? ›

Lack Of Discipline

However, many new traders enter the market with a casual mindset, often influenced by the stories of quick riches. This lack of discipline leads to impulsive decisions and poor trading plans that fail to analyse the market thoroughly.

What is the life of a stock trader? ›

A day in the life of a trader involves buying and selling securities like stocks, shares, digital currencies, commodities and bonds. Some traders work in an office environment with other traders and financial specialists for banks, investment businesses and exchanges.

Can I make a living from trading stocks? ›

You may be wondering, “How Much You Can Earn from The Stock Market?”. Well, the earnings can go up to Rs. 1 lakh a month or even higher if you are skilled enough and your strategies are in place.

What do Wall Street traders do all day? ›

A Day in the Life of a Trader. A trader buys and sells securities, which include currencies, stocks, bonds, and options, to make a profit. The worth of these securities are derived from the value of an underlying asset-and commodities (oil, gold, cocoa, coffee, sugar, etc.).

Should I quit my job and be an entrepreneur? ›

There's not a right answer—just make sure you're being honest with yourself about your earnings expectations. Some individuals might be comfortable quitting their 9-to-5 once their side hustle is netting them $25K per year, while others may want to wait until they can take home $100K annually.

Is it a good idea to become a trader? ›

Key Takeaways. Trading is often viewed as a high barrier-to-entry profession, but as long as you have both ambition and patience, you can trade for a living (even with little to no money). Trading can become a full-time career opportunity, a part-time opportunity, or just a way to generate supplemental income.

Can you live off being a day trader? ›

In summary, if you want to make a living from day trading, your odds are probably around 4% with adequate capital and investing multiple hours every day honing your method over six months or more (once you have a method to even work on).

How risky is it to be a trader? ›

The most obvious risk is losing money—sometimes all of it. Few day traders consistently earn a profit over time. Therefore, consider spending your time and money on other, more productive activities and types of longer-term investing.

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