How To Be a Lifestyle Trader [What to Know]

I love being a lifestyle trader, it provides me with unique flexibilities rarely found elsewhere. In this article you will learn what the day trader lifestyle is and what a trader does.

The day trader lifestyle, as you now know, takes up little time, but what is trading for a living actually like?

The benefits of being a lifestyle trader are that you can be your own boss. You have the capability to plan your working hours. This means that you are able to trade at a time that is convenient and fits around your day-to-day life. Trading on a laptop also means you can do it anywhere, anytime. You will need an internet connection and a trading platform.

One of the benefits of being a lifestyle trader is that you can work from almost anywhere. Part of the trader’s lifestyle is the ability to trade from home which provides extra comfort that most jobs don’t. You can wear whatever you want, something far more comfortable.

If you’re day trading from home you can completely remove the need to travel anywhere. I won’t tell you about how awful driving, or catching public transport to work is, you already know. The traffic, the noisy passengers, the time it takes!

One of my favourite things about the trader lifestyle is walking to a room in my house and already be ‘in the office’.

Be your own boss is such a tacky cliché, unfortunately I don’t know a better term for it. Either way, the day trader lifestyle does allow you to be your own boss. You control when, where, and how you work. This is good because it makes you self-accountable, and you run your trading business how you want.

Lifestyle traders also don’t need to worry about co-workers. It’s nice to be in complete control of your own performance. You don’t have to worry about lazy team members weighing you down. There’s no office politics or personality clashes. You don’t need to listen to Brian from accounting whistle the tune to Gilligan’s Island every day… Every day, Brian!

That all sounds good, but what does a trader actually do?

A lifestyle trader is someone who seeks to profit from the movements in the financial markets. A typical day for a trader may involve waking up, checking financial news, and making a decision on what to trade.

If you are a Futures trader, you check news and make sure there is nothing that will affect your trading for the day. You don’t need to decide what to trade, most futures traders will focus on one market.

Most day traders have a checklist of what to do before they begin trading live in the market. This will vary from trader to trader, but you will need to make sure you’re ready to go.

When the lifestyle trader is ready to start the trading session, they need to be hyper focused. Although day trading can take a couple of hours (often fewer) you do need to remain focused the entire time.

A lifestyle trader will have a trading plan which consists of day trading strategies and general rules that dictate decision making. A day trading strategy will consist of trading patterns, or day trading indicators. These patterns and indicators provide clues on where price is more likely to move.

To be a lifestyle trader you need to have a trading plan. You also need to have a solid strategy for finding good trades (and how to manage open trades).

Peta from the IDTA enrolments team trading from her caravan.

If you’re going to be lifestyle trading from home there are a few things that you will need.

1. Choosing your market
First of all you will need to identify the type of trading that you want to do. If you want to day trade stocks or options for example, you will need to have an account of at least $25,000. This is because of the pattern day trading rule that states that you can only place 3 day trades per week. The rule applies only if your account is smaller than $25,000.

This rule doesn’t exist in the Futures markets. The entry point can be much lower if you’re day trading with little money.

2. Learning how to find good trades
If you’re day trading from home, you’re more often than not, on your own. You will need to learn to trade well before you jump in the deep end.

Because the markets move in common and repeatable ways, they create chart patterns. These patterns appear on a trading chart consisting of “candlesticks”. So, you’ll need to know how to read candlestick charts.

It’s important to understand these patterns so that you can predict where price will move. These patterns will also help you understand where to exit your trade, whether it be in profit or as a loss.

3. Risk management techniques

A large part of trading is the ability to manage risk. You need to know how to place trades with a calculated risk. When you are in an open trade you need to know how to limit your risk. This is something that is often overlooked, but trading is not just finding trades, it’s how you manage them.

4. Trading platform and the skills to use it
To trade from home you need a way of connecting to the market you want to trade. You’ll need a means of placing requests (orders) on that market. This is what your trading platform is for. Most brokers will provide a free trading platform if you use their brokerage service. You can also use a third-party broker, we use NinjaTrader as it allows us to access the exchange directly. Over the counter (OTC) brokers don’t provide this.

5. A broker or market connection

As I said, you need a way of connecting to an exchange to execute buy and sell orders. Most often this is done through OTC brokers who hold your funds and send your orders to the market. Futures traders are different, they can access the markets directly. Futures traders can do this via a trading platform and data feed. This means that rather than a broker setting price, you get the price directly from the market.

6. A Trading plan
To be a successful lifestyle trader you need to have a plan. Your trading plan will provide a set of rules for you to follow so you can maintain your trading edge in the market. Some of these rules will relate to the maximum amount of trades you can place in a day, your profit target for the day, and general trading goals.

7. A Trading Journal
When you’re day trading from home, there is no one above you holding you accountable, as a boss would. This means that you need to ensure that you are holding yourself accountable. The best way to do this is with a trading journal. This is either a document like a spreadsheet, or a software that records your trades. Here you can measure performance and also log your emotions and decision making.

8. Practice (until consistent)
Before you start trading live and risking real money, you want to know what you’re doing. A bit like learning to drive, you learn the theory, then practice before you can go out on your own. To practice your trading, you will need a simulation account. Simulation accounts are also sometimes called a paper trading account. This account trades pretend money; you gain the experience without risking real money.

9. A distraction free environment
If you share a house with a lot of people, or it’s a noisy environment, it’s going to make trading from home very difficult. You need to find a quiet space where you can concentrate for the entirety of your trading session. Try to make your desk clutter free, and turn off anything that may be distracting (T.V, social media etc).

Ingela Traynor – Trading coach for the International Day Trading Academy, travelling and trading in Bali