The lure of day trading is pretty hard to ignore with the prospect of earning a living well into the six figures. For a day trader to be successful there are a number of factors that come into play with the major two being knowing when to buy and knowing when to sell. Through out this article we will look at a scenario starring Marty Forex and see how he makes a living by day trading

At the start of the business day, Marty Forex selects 100 shares of Forex-Trading Inc. He knows from watching the trends that Forex-Trading is about to make a big move upward, and he is right, the stock gains at least a point by noon of that day. As a day trader, Marty wants to walk away with profit by close of business, so he sells off this upward moving stock and splits up the profits from the sale. Part of his profits goes into his day trader account to make sure that he will meet his minimum equity; the other part goes back into investing. He has had his eye on another stock that is set to make a nice upswing as well. Marty is successful, because he is careful and because he knows how to read the stock signs.

Lets say that Marty Forex made a $100 for the before mentioned trade (I am using this amount for simplification reasons) chances are Marty would us half of it to cover capital and half to put forward to future investments. Of course, no one in the day trading game is doing any investing with $50; again, this figure is simply for illustration. If Marty makes five similar trades for the business days, with the same results, he will have made $500 of profit. Keeping with that trend, trading five days a week would net Marty $2500 of profit per week. (Commissions, overhead costs and other business expenses, realistically bringing the amount down to $2000 or less would reduce this figure.) This is still a nice bit of profit, considering that this is only one stock’s trade performance. Marty Forex probably handles quite a few more trades than that in a typical day’s time.

Now unfortunately not every trade is going to result in a profit so lets look at a scenario where Marty Forex handles ten stock trades per day with the same $100 profit. We will say that Marty is successful on 30% of his trades so out of the ten trades Marty makes $300 profit. Same scenario for a typical week will see Marty bringing home around $1500 before expenses kick in. Hopefully with more education on determining what a stock is going to do next Marty can increase his success percentage which increases his profits.

Day trading is like any other profession where as the more education and knowledge that you have the better off you are going to be. In my opinion a person should treat Day trading like brain surgery where one mistake can cost you dearly. With the explosion of the internet age there are a ton of resources and materials out there that will increase the chances of success.

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categories: day trading, stock trading, forex trading, forex, currency trading

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