Is day trading profitable?

It is not difficult to make money day trading but most people go about it all wrong and end up losing money instead. The "secret" to making money daytrading is twofold:

1. don't get greedy and

2. correctly capitalize your positions.

You see most people believe that in order to make money trading they need to trade more often. After all, if you trade 50 times a day you'll make more money than if you traded just five times a day, right? Wrong.

This kind of logic might work in the non-trading world, where more work = more money; however it tends to have the exact opposite effect in the trading world where trading too often not only hinders your ability to be profitable but can actually cause you to lose money. (Of course institutions and floor traders have faster executions than we do so they can profit off micro-scalping hundreds of times a day but this is not a reality for the retail trader).

If you want to be a profitable day trader you would do better to trade less often. Doing so improves your chances of staying profitable by avoiding losing trades. After all, it's a lot easier to find 2 or 3 winning trades than it is to find 10 or 20. But trading less often does not have a negative impact on your profitability. In fact, if you capitalize your trade correctly you'll earn much more by trading less.

For example, did you know that if you trade the emini S&P just two times a day for a $50 profit each trade ($100 total) and you traded 10 contracts each time, you would make $200,000 a year?

Can't afford to trade 10 contracts? Okay, what about 5? That's still $100,000 a year. Can't afford 5, what about 3? That's $60,000 a year. I know a lot of people working a lot harder to earn their $60k a year than finding two $50 trades a day!

Even if you only traded a single contract, twice a day for $50 profits on each, that is still $20,000 a year. What could you do with an extra $20k? If nothing else you could use it to build your account to the point where you can trade even bigger volume and make even more money.

And don't think for a moment that there aren't traders doing this exact thing every single trading day. As I said, the secret is not trading more, the secret is taking your profit when you have it and capitalizing on it correctly to earn as much money as you need. With this simple formula there is technically no limit to how much you can earn.