Day trading and investing have become popular career paths for most people today. This explains why many companies in the sector like forex and CFD brokers have seen an uptick in the number of users.
Its popularity rose during the Covid-19 pandemic as governments announced substantial stimulus. In this article, we will focus on when you should start your trading career.
What is day trading?
To answer this question, we need to explain what day trading is and how it works. Day trading is the process of buying and selling financial assets like stocks, commodities, and currencies with the goal of generating a profit.
Day trading has a shorter horizon than investing since day traders need to close all their trades by the end of the day. Investors, on the other hand, can hold their positions for months and years. Swing traders, on the other hand, usually hold their trades for a few days.
There are many approaches to day trading. For example, there are those day traders who use the scalping technique, where they buy and sell assets within a few seconds. The goal is to open tens or hundreds of trades per day and make a small profit on each.
Is there a correct age to start trading?
A common question is on whether there is a correct age to start day trading. The simple answer to this is no.
In the past, many people have succeeded in their trading career after starting at different age groups. In 2022, it was widely reported of a 20-year trader who made $110 million trading Bed Bath and Beyond shares.
Historically, many of the popular investors and traders are those who started their careers early enough. For example, Ken Griffin of Citadel started his trading career at Harvard University where he was a student. Others like Warren Buffett and Bill Ackman started their careers in their early 20s.
On the other hand, we have seen many successful individuals who started and succeeded trading in their old age. For example, in 2021, many elderly people started their trading careers and succeeded.
The benefit with day trading is that you can start at any age.
For one, the process has become relatively easier these days since most brokers offer a free demo account for people to use. A demo is a practice account that gives them access to the market without risking their funds.
Most importantly, you can easily find learning materials for free or a small fee in the internet. You don’t need to enroll in a school to learn more about trading. The chart below shows the average age of stock traders in the US.
When is the right age to start trading?
The right age to start trading is now since the earlier you start trading the better the outcome will be.
For example, starting your trading career in your teens and 20s will give you a lot of exposure to the market at an early age. If you are successful, you will have a long runway to succeed as a trader.
This explains why many well-known hedge fund managers who started their careers early have become extremely successful in the long term.
Another benefit of starting your trading career early is that you are allowed to make mistakes. For example, if you find trading to be difficult, you can easily switch to other career fields.
Mot importantly, as a young person, you have a lot of free time in your disposal. Chances are that you don’t have children and a family to take care of.
If you are past your 30s, the correct time to start trading is also now. The earlier you start, the better your chances of success will be.
What if I am older?
The later you decide to start, the more complex it might be. Particularly if you are already engaged in a 9-5 job, and you have a family to take care of.
In this case, the best option is to start part-time by taking advantage of extended hours and become familiar with the markets. For people living in Europe this step is much easier, because the U.S. session will still be open once you leave the office.
But don’t be in a hurry to quit your job!
The best way to swap from part-time trader to full-time trader (or office manager) is to have a fair amount of money set aside, allowing you to have at least 6-12 months of autonomy without risking the money you need to live.
How to prepare to start your trading career
There are a few steps you need to follow before starting (really) your trading career. First, you need to spend some time learning more about the market.
In this, we recommend that you start by reading materials about trading. Fortunately, there are hundreds of quality books that you can use to find more information about this.
In addition to books, you can enroll in some online courses about trading. These courses will give you more information about how the market works and how to trade.
You can also spend a lot of time watching YouTube videos on how to trade. Trader.Tv, which is owned by DTTW™, is one of the best ones to watch since it has some educational content and live trading.
You can learn a lot to watch professional traders do their thing. After all this, you should craft your trading strategy using a demo account.
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How to know you are ready to start your trading career
The next question is on how to know you are ready to start your trading career.
You should start your trading career after learning more about trading and coming up with an ideal trading strategy. In other words, ensure that your trading strategy is profitable in a demo account.
Never start trading when you are making losses continually in your practice account!
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Why a prop firm is better
Now, you can start your trading career easily by just creating an account in one of the top brokers. This will transition you to a retail trader. However, we recommend that you start your career as part of a team or a trading floor.
At DTTW™, we have seen many people start their careers by being employed by a trading floor operator. They then grow too much and open their own floors.
The benefit of starting trading at a firm is that you will learn more about the market from a team of experienced professionals.
In this article, we have looked at the idea of when you should start trading.
We have found that people who start trading early have better advantages than those who start in their later stages. At the same time, we have also seen that many people start their careers later on and become successful.
Success does not depend on age, but mostly on commitment and passion (and knowledge of certain factors that have their impact in a trader’s career).
Do you want to start your career? Get in touch with our team!
External useful resources
- How can a 20 year old start trading stocks? – Quora