Let’s say you can’t earn more than $1,600 a year from day trading. In other words, if you can make $1,600 from day trading, it doesn’t matter how much you can earn on a daily basis.
But wait, what if you want to earn a little more and live a more luxurious lifestyle? What if you want to make up for not being a college professor? What if you want to join Goldman Sachs as a financial advisor by trading stocks? Let’s find out:
How Does Day Trading Work? Day Trading works exactly like stock trading with some important changes in its structure: Day Trading is one or two hour per day trades with your broker. A lot of the time, you’ll trade from 8 a.m. until 9 p.m.
You don’t own shares in the stock you’re attempting to buy (so don’t expect profits on trades). Instead, the stock you’re trying to buy is trading on a different exchange which is not necessarily open (e.g. the NYSE), so you will not be earning commissions
If the price drops, you’ll make a loss. If it rises, you’ll make a profit. If you make a loss on a trade, your broker (your broker will be trading on multiple exchanges so you can try to get multiple trades, as well) has to go through the expense to trade the shares again. In other words, if you make one profit, your broker has to lose a share to cover his or her losses. So, in most cases, we don’t want to trade on the best exchange, the NYSE
There’s no commission. No one is forcing you to make your trades. You are not paying them a single penny for every share you sell.
You can’t invest in the investment you’re trying to trade. Instead, you’re selling a particular security and buying a variety of other assets that are available on that exchange, as well as stocks on the NYSE: Your brokerage has made the decision that shares of the company you intend to trade are not available in the exchange where you want to trade. There’s only two options:
You can trade an entire business (with a lot of shares in it) to buy an even more business (with a lot of shares that you can’t trade). It’s called an “asset float” – a business will trade at a certain percent of its total shares (if you buy 2 billion shares of XYZ company
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