Last Updated on 20 February, 2021 by Samuelsson
Day trading attracts the attention of most aspiring traders because they believe that it promises fast-paced action and high returns. It is not surprising that you may want to learn to day-trade and may be wondering how long it will take it.
It may take several years to learn to day-trade. The time varies greatly from person to person, and some day traders might not become profitable no matter how long they take. The best way to speed up your learning is to enroll in a good day trading course so that you can learn from an experienced trader and mentor. However, you should know that learning to day-trade is a life-long journey, and every trader’s journey is unique.
In this post, you will learn the following:
- What it means to day-trade
- What it takes to learn to day-trade properly
- How long it takes to learn to day-trade
- Why it takes a long time to learn to day-trade
- How to minimize the time it takes to learn to day-trade
- How to know you’ve learned to day-trade
What it means to day-trade
To day-trade simply means to open and close a trade within the same trading day. It could be that you buy and then sell some hours later or that you take a short position and later cover your short before the trading day ends. This style of trading is called day trading. While day trading can be practiced in any market, it is more common in the foreign exchange market and the stock market.
Being a decentralized market that runs continuously from different parts of the world every business day — Monday to Friday — the Forex market offers the opportunity to day-trade almost 24 hours per day across different trading sessions that represents the market hours in the major financial centers of the world.
The stock market is a bit different in that, in each country, it is run by a central exchange, which regulates the day trading process from the market hours to the required trading capital. On the NYSE, for example, the market hours are between 9:30 and 16:00 hours, so you officially have six hours to day-trade.
Since we mostly trade stocks, we will focus on the stock market. As we stated earlier, when trading on a particular stock market, you have limited hours to officially day-trade (there some orders you can place during after-hours). So, you have a short time to pull money out of the market each day, which means that you need to have good trading strategies that work very well in identifying short-term price movements on the lower timeframes.
Developing such strategies is not easy because the competition in the market has become so stiff that finding an edge, especially in the intraday timeframes, for discretionary trading is extremely difficult. And, it is not just about the strategies, you also need to learn how to control your emotions and execute the strategies properly. Even if your strategies are coded for automated trading, you still need to train your trading emotions so you don’t go about altering your system frequently.
What it takes to learn to day-trade properly
Learning to day-trade is not an easy thing as there are many things you will have to master, beyond knowing when to enter and exit a trade. The key elements of day trading you need to learn include the following:
- The basics of day trading: You will start by learning the basic things about trading in general and day trading in particular. Those basics include common trading terminologies, trading platforms, how the market is set up, the different trading approaches (fundamental and technical analysis), and introduction to some of the trading indicators and graphical tools used in technical analysis, as well as how to read price action.
- Some day trading strategies: Of course, you have to learn some day trading strategies in detail. There are many strategies out there, but most of them don’t work. You need to learn how to research the market and develop strategies of your own that have some edge in the market. Also, you have to learn how to backtest and forward-test your strategies.
- Risk and money management: Although risk and money management normally involve how much money you are putting on the line in each trade, money management often refers to your account risk and use of leverage, while risk management refers to your stop loss strategy and other trade management strategies used to reduce your risk exposure, such as diversification and the use of circuit breaker. You need to master both aspects of trading if you want to succeed in day trading.
- Trading psychology: One of the most important aspects of trading is trading psychology, which refers to your ability to control your trading emotions, such as greed, fear, hope, despair, anger, and so on. Acquiring the mental skills to control your emotions when trading is the only way you can effectively execute your strategies without making devastating mistakes that can decimate your trading account in no time.
- Record keeping: To be a good trader, you must have a trading plan, and to know how well you are following your plan and how well the plan has performed, you need to keep a trading journal. You should learn about these two.
Learning all these aspects of trading takes time and effort. You have to put in the hard work. It is a gradual process, so you should take them one after another. One thing that can help is setting short-term goals. You first learn the basics and then learn how to create and test strategies. You can then start paper trading (simulated trading) to learn how to follow a trading plan, manage risks, and keep a record of your trading activities. If things are good enough, you can put your money on the line — start small and increase as you grow — so that you can acquire the necessary mental skills (trading psychology).
How long does it take to learn to day-trade?
On average, it may take more than 1-5 years for an aspiring day trader to learn to day-trade, but this varies greatly for each person. In fact, some may never the necessary skills to become profitable. One of the best ways a potential day trader can speed up the learning process is to enroll in a good day trading course, where he or she can learn from the mistakes of other traders so as to avoid making them.
A day trading course may actually take a few months to complete, but after the course, the traders need to keep practicing on their own to master what they learned. As we stated before, not all day traders will end up profitable no matter how long they learn from a day trading course because that is not where their passion lies — everyone’s journey in life is different.
For the passionate and potentially profitable ones, it’ll likely take six months to a year of daily live trading practice before they can master the skills to consistently make money from the market. A few might be lucky and start making money in their first couple of months of practice. But it’s just that — pure luck.
Even after you have started making a consistent profit, you will still have to keep learning. Learning to day-trade is a life-long journey, and there are many things you will have to master, beyond knowing when to enter and exit a trade. To put it simply, here is what the learning process would be like in the beginning in terms of duration and amount of work required:
- It will take about 6 to 12 months of hard work before you become consistent enough in implementing your trading strategies and plan for you to start making monthly profits. For most traders, that is what it usually takes — between 6 months to a year — before they start seeing consistent monthly profits that can be sustainable into the future. If you reach that point of making consistent monthly profits, you will likely continue making profits.
- In the beginning, you will need to put in at least several hours a day in your trading practice. If you are only putting in an hour or so a day, it may take you a much longer time to become profitable. Of course, when you are developing and testing your strategy, you may be doing simulated trading (paper trading). When you are convinced about the strategy, you will have to put money on the line and trade a real account so that you can develop the vital trading psychology skills. However, you have to start small so that you limit your risk exposure. There is no way around putting in the hard work at the beginning if you want to acquire the skills to become consistently profitable within months instead of years.
- You should know that if after you have learned how to day-trade if you leave trading for some time, the skills may leave you. When you come back later, it will take you some time to get back to form. For example, if you stay away from trading for a few weeks, it could take a couple of days to get back to form. Similarly, if you are away for a few months, it could take a few weeks to regain your trading sharpness, and if you take a year off, expect to spend a couple of months to sharpen your skills and get yourself back to where you were before you took the break. So, the more time you are away from trading, the longer it will likely take to get back to form.
Why does it take such a long time and hard work to learn to day-trade?
In life, anything good and worthwhile doesn’t come easy; they always require effort to achieve and take time too. So, day trading is not an exception. If you want to reap the benefits of having a skill that allows you to consistently pull money out of the financial markets, especially the stock market, you have to work extra hard to acquire those skills — you must put in the hours for several months or, if necessary, years!
The truth is that there is so much to learn. Unless you have been trading the financial markets before, learning to day-trade will be like going to a new field of study. In the college or university, it will take you about four years to major in that field and another two years to complete the master’s program. So, it is basically how it is. The only difference here is that you are following your own schedule and can hasten the process if you are a fast learner.
You will spend time learning how the market works and the basics of day trading. After that, you learn how to develop your own trading strategies and the key principles of money management. At this time, you can start practicing trading on a demo account, which can go on for months until you have mastered how to apply what you have learned and are consistently making profits on the demo account.
Now, you have to graduate to trading a live account where you put your money on the line. This is when you start learning the most important skills in trading — the ability to make trading decisions without being led astray by your emotions. As you know, when real money is on the line, emotions can run high. Acquiring the ability to control your emotions when trading (trading psychology) in such a fast-paced, day trading environment is what separates real day traders from wannabes, and it can take several years to learn this mental skill. This is why it takes a long time to learn day trading.
How to minimize the time it takes to learn to day-trade
There are several things you can do to reduce the time spend learning day trading, and these are some of them:
- Keep a record and learn from your mistakes: “Experience is the best teacher”, they say. As a trader, you have to learn from your own experience, and the only way to do that is to maintain a trading journal and review it periodically. In your journal, you record everything about your trades, including your feelings when making trading decisions. Doing so you will continuously gain new insight about your trading and what is holding you back.
- Have a mentor: It is almost impossible to learn day trading on your own. All great day traders were once mentored by great teachers. Get a mentor who is free to share his/her experiences with you so that you can learn from his mistakes and insights. Your mentor can also guide you towards new sources of learning.
- Socialize with other traders: In day trading, just like in any other field, socializing is one of the best ways to get out-of-context knowledge. Socializing exposes you to new ways of thinking about problems and offers you a new perspective in solving them. You should learn how to leverage unique perspectives of your social circle to come up with innovative ideas, which you may use to develop trading strategies. Find other traders around you or join an online trading forum.
- Test new strategies using demo accounts: Use trading simulators to test your strategies without putting your money on the line. This way, you can adjust your strategies without putting your money at risk.
- Enroll in a day trading course: You certainly can, on your own, learn to day-trade, but it will take a much longer time. Besides, the risk of failure is much greater, so investing some money in a good trading course is an investment that will pay off quite quickly. However, a lot of day trading courses on the internet don’t worth a penny or outright deceptive. If you are looking to buy a trading course, carefully scrutinize the work of that vendor to ensure that what you are getting is realistic. As always, if something is too good to be true, that’s also what it is, most times.
- Opt for algorithmic trading: It is very difficult to be profitable with discretionary trading these days, especially when it comes to day trading. So, we recommend you go for algorithmic trading. It really is superior to discretionary trading in many regards, and by buying a few strategies from us, or other legitimate vendors, you can be up and running in no time.
How to know you’ve learned to day-trade
Learning to day-trade is a life-long journey, here is how you know if you are getting better at day trading:
- You don’t celebrate every win or loss as you feel almost the same about both outcomes — you’re not emotional about your trades.
- You keep your losses small and your winners big — it’s ok if you have more losers than winners, but your winners need to make you much more money than your losers.
- You are consistently making money from the market for several months trading real money, and you are not eager to increase your position size to make more money but rather follow what your trading plan says.