It’s the ultimate goal of almost any new trader. Becoming a full-time trader with consistent profits means financial freedom and being your own boss.
But, what does it take, financially, socially, and physically, to beat the markets on a regular basis and make a good income from trading?
Trading isn’t as easy as many online educators want you to believe. It takes experience, patience, and screen-time to make a career out of trading.
However, once you master the game, it can become rewarding.
So, here is our guide on how to become a full-time trader in the year ahead.
Trading as a Career
Trading is the hardest way to make easy money, yet so many new traders are attracted to trading each day. There are millions of active traders around the world. While some of them do this as a side job, many of them are trading full-time and make a fortune in the markets.
So, what makes trading so attractive?
First, the advance in technology in the last few decades has made trading much more accessible. While the game was reserved for the big boys in the last century, almost anyone can open a trading account today in a matter of minutes. Retail trading, or online trading, is in a boom phase and growing each year.
Trading as a career is as old as the first financial markets. Bankers in Verona and Florence began trading in government securities as early as in the 14th century. Wall Street opened in 1792 with twenty-four supply brokers, and people, in general, have traded anything from commodities, gold, and food since the beginning of humankind.
Without traders, the world as we know it today wouldn’t exist. In fact, one could argue that the skyrocketing economic growth during the 20th and early 21st century has been the result of falling trading barriers between countries, globalization, and free capital flows.
For the sake of this article, we’ll be referring to a trading career as being a full-time trader who wants to take advantage of short-term price movements in popular asset classes, such as stocks, currencies, bonds, commodities, precious metals, cryptocurrencies, and derivative contracts.
Depending on your trading style, you can also trade longer-term price movements with swing trading or position trading strategies. However, the important distinction to make here is that a career in trading doesn’t refer to very long-term, buy-and-hold investments. Rather, full-time traders aim to profit from shorter-term fluctuations and volatility, and then immediately look for other attractive trading opportunities across different asset classes.
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What Does It Take to Become a Pro Trader?
Although it’s quite easy to become an independent full-time trader, being consistently profitable is what most traders have trouble with. Trading is like any other job, which means that it takes experience, knowledge, and dedication to become good at trading.
Airline pilots attend years of education and hours of practice before becoming a full-time pilot. Engineers and doctors study for years before they’re capable of performing complex tasks. When it comes to the required experience to become a profitable trader, trading is no different than any other job.
However, there is one important distinction here: They won’t teach you trading at school. You need to be prepared to do the work yourself, analysing the markets and charts for months, learning as much as possible about market fundamentals, price-action, and risk management before being able to become a full-time trader. Online trading education and reputable trading courses can also help you fast-track your progress.
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From my experience, it will take around two years for most retail traders to become consistently profitable in the markets. It looks like this period is the sweet spot for getting acquainted with trading foundations, getting enough screen-time, gaining experience and intuition for price movements across different asset classes, trying out different trading styles and strategies and finding the one that works for you, etc.
Naturally, the actual learning curve depends on each individual trader. Some of you will become profitable in a matter of months, while others will take a few years, perhaps realizing that they’re not cut out for trading.
There are certain psychological traits that will make it easier for aspiring traders to become successful. Dedication, emotional control, patience, and discipline are arguably the most important traits that a trader can have.
There are unlimited trading opportunities in the markets, and if you don’t know when to enter into a trade, when to exit, when to lock in profits and when to cut losses, you’ll have a hard time growing your account. Fortunately, if you develop a set of trading rules, it will become much easier to read and trade the markets.
Check out our free course “Building the Evidence” that will bring control and process to your analysis this course, we’ll take you through the steps you can follow to analyse the financial markets to find trading opportunities, how to weigh them up and ultimately how you might profit from them.
Trading for Yourself vs Proprietary Trading
There are two distinctive paths you can take as a full-time career trader. First, you can trade your own funds from home in your personal trading account, or second, you can apply for a position at a proprietary trading firm. Prop trading firms provide the education, environment, and funds for new traders, so you end up trading someone else’s money. In return, you sign a contract that specifies a percentage split of the profits you make for the firm.
Getting a position in a well-known prop trading firm is very competitive. In addition, you’ll have to adhere to their trading style and risk rules, which can reduce the potential profits you’re able to make.
On the contrary, when trading for yourself, you’re your own boss. You pick the markets you want to trade, the strategies to use, the risk levels to stick to, and the trading hours. However, with freedom come certain drawbacks: You’re solely responsible for your performance and/or underperformance, but you get to keep all profits for yourself.
A Day in the Life of a Full-Time Day Trader
Many new traders wonder how a day in the life of a full-time day trader looks like. So, here’s my daily trading routine:
1. Morning preparation: Since I am based in Europe, my trading day usually starts with the London open at 8:00 GMT. However, my alarm rings one hour earlier, so I have the time to grab a cup of coffee and do my morning prep.
I check the main news headlines for the morning, look at an economic calendar to see if there are any major reports scheduled for the day, take a look at the previous Asian session (if trading around-the-clock markets like FX) and major stock indices.
This morning preparation is very important to me, as I get a feeling for what markets are focused on for the day, and for the overall risk appetite before the London open. It also gives me time to go through some charts that I think could be interesting for the day (based on news headlines and upcoming economic reports), marking major support and resistance levels and possible trade setups for the day.
2. Trading: This is the interesting part. As volatility picks up after the London open, I am prepared to pull the trigger and open a trade if the rules of my trading strategy are met.
To stay focused across different charts, I place price-alerts above/below major technical levels to inform me of upcoming trading opportunities.
Depending on the opportunities for the day and the profits I make, I’ll either trade until noon or occasionally wait for US markets to open to catch a few more trades.
3. Daily review: Once I am finished for the day, it’s time for my daily review. Many traders neglect this part, but for me, it’s as important as my morning preparation.
In the daily review, I go through all the trades I made during the day, look for levels where I could have added to my position and increased risk, look for some trading mistakes to avoid in the future, and calculate my profit/loss and win rate for the day. Reviewing your trades is a powerful way to improve your trading performance.
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Pros of Trading Full-Time from Home
Here are the most important advantages if you decide to become a full-time trader from home.
You are your own boss
As an independent full-time trader, you make the rules for yourself. You determine the markets you want to trade, the trading hours, strategies, and more. Independent full-time traders have the freedom that traders at proprietary trading firms usually don’t have.
However, some traders find it more difficult to trade on their own, without a supervisor who manages their risk levels and trading style. Being an independent trader means that you need to have the discipline and patience to follow your trading plan.
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You determine your risk-levels
Independent traders can determine their risk levels that they want to follow in their trading, whereas employed full-time traders have to stick to risk levels of their firms. Nevertheless, one could argue that this perk of being an independent trader could be a double-edged sword: If you put on too much risk, your losses can significantly increase.
That’s why it’s mandatory to study prudent risk management before becoming a full-time independent trader.
A smart way to manage your risks is to stick to a pre-specified risk-per-trade, i.e. the total risk per any single trade. As a rule of thumb, avoid risking more than 2% of your trading account on any single trade, unless you’ve identified an A++ setup. With those high-probability setups, you may want to increase your risks to make the most profits in the market.
However, bear in mind that not all setups are high-probability setups, and identifying the ones that are takes experience and market knowledge.
Also, set a total risk for the trading day. For example, you may want to quit trading for the day if you lose more than 5% or 10% of your trading account. Check what rules work for you and incorporate them into your trading plan.
You pick the strategies you want
As an independent trader, you are free to pick any trading strategy you want. Whether you want a trend-following strategy, breakout strategy, mean-reverting strategy, short-term momentum strategy, or a combination of any, you’re free to trade the way you want.
On the other hand, many prop trading firms prefer certain trading styles and strategies.
No strict working hours
There are no strict working hours as an independent trader. However, some market hours still provide better trading opportunities than others, so you may want to be in front of your trading screen during that time.
For example, when trading stocks, days when earnings are announced and the first few minutes after the market opens can have significant price movements. If you prefer trading on forex, then the New York – London overlap, from 13:30 to 15:30 GMT, often provides great trading opportunities, just like important market reports.
When trading at a prop firm, you’re usually in front of your trading desk from the market open to the close. While this means potentially more trading opportunities, you may also be wasting valuable time – time that could be used for trading education for example. As an independent trader, you pick the strategies you want and trade the market hours that return the best profits for your strategy.
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Cons of Trading Full-Time from Home
Trading full-time from home is not all about advantages. There are certain drawbacks as well, which are discussed below.
As a retail full-time trader, you may have certain information and technology disadvantages compared to traders at prop firms.
Most retail traders cannot afford expensive real-time news feeds, like Bloomberg for example, or they don’t have the funds to invest in top-notch trading technologies, like tailored trading platforms. There isn’t much you can do about this except steadily growing your account until you’re able to afford those goodies as a retail trader.
Care about your social life
Trading from home has another disadvantage, which is the quality of your social life. There are no colleagues around to chitchat with (unless you have an online trading buddy to chat with over Skype or WhatsApp).
Fortunately, since you’re the master of your trading hours, may find more time to socialize outside of your house. The key here is to make the right balance between trading and private life: Trade too much, and your social life will suffer; trade too little, and you won’t make it as a successful trader.
How Much Money Do You Need to Become a Pro?
As a professional full-time trader from home, trading will likely be your only income source. This increases the pressure to become consistently profitable and can lead to trading mistakes. Even in a losing month, you’ll still have to pay for your bills and other expenses. If you’re married or have kids, this makes it that much more difficult.
That’s why you should decide to become a full-time trader only after you know that you can be successful. Firstly learn about the breakdown of trading costs and then start with a small account and grow it gradually. Check your trading performance and get a feeling for your average monthly performance. Also, make sure that your account is growing even after withdrawing some funds. Trading is a long-term game where your goal is to increase your trading account in the long run.
A track record and trading journal will help you determine how much money you need to cover your daily expenses. If you averaged 5% per month during the previous year, and your monthly expenses sum up to around $5,000, then you’ll need a trading account of at least $100,000. If your profits are higher and your monthly expenses lower, then you could also go with a smaller trading account.
Becoming a full-time trader takes experience, market knowledge, patience, and discipline. There aren’t many overnight success stories, but enrolling at a good trading course with live workshops can significantly fast-track your trading career.
Take your time, build on your trading strategies and fine-tune them, build a daily trading routine, and review your past trades regularly to identify common trading mistakes that could have been avoided. With the right mindset and work ethic, you can become a full-time trader, just like thousands of others.