How To Become a Day Trader (With Salary and Job Outlook)

By Indeed Editorial Team

Published October 8, 2021

A day trader is one type of professional who purchases and sells stocks using the stock market. Day trading can be an ideal career for many people because it has the potential to offer competitive pay and flexible work hours. If you have experience trading stocks and are interested in taking part in more competitive transactions, you might consider becoming a day trader. In this article, we consider what a career as one of these traders can be like and explore a list of steps for how to become a day trader.

Related: 10 Jobs in Financial Securities (With Salaries and Duties)

What is a day trader?

A day trader is a professional in investing who buys, sells and trades stocks in transactions that take place within a single day. While there are many job titles that relate to trading stock, a professional only qualifies as a day trader if they trade four times or more over five days. Another way for a professional to secure status as a day trader is if their employer officially identifies them as one.

They can perform many of the same duties as a general trader, but day traders have a higher personal equity requirement, which is typically $25,000. This means that day traders usually need at least this much money at the start of each trading day to ensure they can cover any losses they experience.

What does a day trader do?

Here are some of the most common job duties for a day trader:

  • Keeping track of trends in the market daily

  • Conducting trades that have a quick turnaround

  • Funding trades from their personal accounts

  • Purchasing stocks they believe might perform well

  • Selling stocks they think might drop in value

  • Understanding different financial securities

Related: 16 Trader Skills To Develop for Success

Work environment for a day trader

Many day traders work independently and conduct trades without the help of an investment firm. These day traders often work from home or in places where they can access the internet, such as coffee shops or libraries. Some day traders work for day trading firms, where they perform transactions alongside other day traders at a central location, typically an office. While day traders can work very flexible hours, they still often work every day so they can take advantage of new trading opportunities that appear daily and respond quickly to changes in the market.

Related: How To Become a Professional Trader (With Salary and Job Outlook)

How to become a day trader

Here are some steps you can follow to start your career as a day trader:

1. Open a brokerage account

A broker is a person or company that performs trades for other parties, usually investors. Because brokers research and conduct the actual trades, they often have access to information about trends in the market and the performance of different stocks. Because of this, having an account with a broker can open you to more information about the stocks you might trade, such as charts that show certain stocks' movements. It can be most common for independent day traders to use online brokerages that give them the ability to perform trades on a website or mobile application.

Related: Everything You Need To Know About Becoming a Stockbroker

2. Ensure your account meets the equity requirement

The minimum equity requirement for day traders is $25,000. Because of this, it can be beneficial to make sure that you have enough money in the bank account you plan to use for day trading before you begin. This can make adhering to the day trading regulations simple and protect you from large losses, as having this amount of money available can help you cover any trades that might not perform well.

3. Conduct at least four trades within 5 days

Another key aspect of being a day trader is performing at least four trades over the course of five days. While it can be common for day traders to trade more than four times in a week, this can be a great place to start and get used to opening and closing trades quickly. Many day traders frequently open and close trades within the same day. Because of this, conducting as many trades as you can when you first start your career can help you reach a level of expertise where you can complete same-day trades as well.

4. Verify that your day trades make up over 6% of your total trades

Another requirement that most day traders have is that their day trades should make up over 6% of their total trades for the week. This means that even if you perform other types of trades that take long periods of time to complete, you still usually need to make a certain number of day trades to meet the 6% quota. You can keep track of what percentage of your trades these transactions make up by using a spreadsheet and basic calculations.

5. Consider joining a day trading firm

If you want to become a day trader but are interested in finding an alternative option to having $25,000 in your account, you can join a day trading firm. These firms employ day traders to conduct transactions from their offices and typically have more lenient requirements for them. For example, a day trader who works in a day trading firm can have less than $25,000 and can conduct three trades per five days of trading rather than four.

Salary and job outlook for a day trader

While Indeed doesn't have salary data specifically for a day trader, they provide the average salary for a trader, which is a very similar job title. The national average salary for a trader in the United States is currently $81,843 per year. Indeed also notes that traders can have the potential to earn an average of $25,000 per year in commission. Many traders receive employee benefits as well, such as commuter assistance, unlimited paid time off and opportunities to work from home.

The U.S. Bureau of Labor Statistics doesn't offer job outlook information specifically for day traders, but they do have a listing for securities, commodities and financial services sales agents, which are closely related job titles. According to the BLS, the number of people employed in these positions is expected to increase by 4% from 2020 to 2030. The BLS states that this growth might result from an increasing number of positions that open when employees retire from the industry.

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