How to Become a Trader

It’s not easy to learn how to become a trader so you can start day trading for a living. When someone who’s new to the market wants to become a successful (and licensed) trader, there are many steps to take. If this sounds like you, fear not! By taking the time to visit this website, you’ve already started the process and we have plenty of resources at your disposal to help you on your path to profitable day trading. But first, here’s a list of some of the main steps that will have to take on your way to day trading for a living.

  • Educate Yourself. The most important thing a new trader can do is get educated about the language of trading and basic market concepts. There are a lot of terms and concepts to learn, but taking the time to understand them will be a major help to anyone hoping to learn how to become a trader.
  • Get Licensed. Once you’ve learned enough about the market to know that you want to start day trading for a living, you have to get licensed. No proprietary trader is allowed to trade without passing the Series 56 Exam. The Series 56 tests your knowledge of securities markets, investment strategies, and the current regulatory policies.
  • Practice. Use demo platforms to get a handle on what it’s like to actually execute a trade. New traders should try a variety of Order Execution Platforms and go through the basics of each system before deciding on the one they like best. Before going live, all new traders should be comfortable with placing and executing orders, back-testing strategies and managing their emotions throughout the trading process.
  • Go live (with some help). Once a trader is completely comfortable with their demo software, it is time to go live. But new traders should not trade alone. A mentor can help a new trader stay focused and give structure to the trading day, assuring that the new trader is growing with each passing day. Oftentimes mentors will utilize a virtual trading floor; it’s a way to be in a group environment to share ideas with other traders while receiving valuable insights and advice.
  • Continue to grow. It’s a huge milestone for a new trader when they make the transition from consistent losses to consistent profits. But as big a milestone as that is, a trader’s journey is far from over at that point. People who make a living out of day trading know the value of a diversified skill set. All traders need to constantly educate themselves about the market and develop the tools and the know-how to adjust to the ever-changing conditions.

It’s not easy to day trade for a living; it takes time and a lot of hard work. But Wall Street Trading is here to help: we have the education platform, mentorship, and community necessary to take you through the process and position you for a successful career as a day trader.


Wall Street Trading


You should consider the following points before engaging in a day-trading strategy. For purposes of this notice, a “day-trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same security or securities.

Day trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the funds that you use for day trading. In particular, you should not fund day-trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet your living expenses.

You should be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses.

Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with other professional, licensed traders employed by securities firms. You should have appropriate experience before engaging in day trading.

You should be familiar with a securities firm’s business practices, including the operation of the firm’s order execution systems and procedures. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to system failures.

Day trading involves aggressive trading, and generally you will pay commissions on each trade. The total daily trading fees that you pay on your trades will add to your losses or significantly reduce your earnings.

When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk. A decline in the value of the securities that are purchased may require you to provide additional funds to the firm to avoid the forced sale of those securities or other securities in your account. Short selling as part of your day-trading strategy also may lead to extraordinary loses, because you may have to purchase a stock at a very high price in order to cover a short position.

There are special risks associated with uncovered option writing that expose the investor to potentially significant losses. The writer of an uncovered call may incur large losses if the value of the underlying security exceeds the exercise price; and the writer of an uncovered put may incur large losses if the value of the underlying security declines below the exercise price. Uncovered option writing is not suitable for everyone. The strategy is only for the knowledgeable investor who understands the risks, has the financial capacity and willingness to incur potentially substantial losses, and has sufficient liquid assets to meet applicable margin requirements.

Proprietary traders may be required to make initial capital contributions to registered broker dealers. There is no guarantee that the trader will be successful and these capital contributions may be lost.

Proprietary traders are not customarily paid any salaried compensation. Instead, traders are entitled to distributions based upon profits from their trading – pursuant to their Class C interests in the firm.