Written by Katie Gomez

Stock trading can often seem overwhelming, but it can provide a steady income with less effort than expected. Whether as a part-time gig or a full-time career, the path you choose depends on your goals and the effort you’re willing to invest. Stock trading appeals to younger generations, like GenZ and Millennials, who value flexibility and independence. The ability to choose between retail and day trading options, each beneficial in its own right, adds to its attraction. 

If you stick with it, stock trading can be an incredibly lucrative side hustle. Although part-time trading is easier to commit to compared to a full-time trading career, it can still be challenging to devote time, energy, and money without getting the immediate gratification you want.

Trading as a Side Hustle: Getting Started

Initiating your trading journey involves setting clear goals and intentions. What do you want the next six months to look like as a trader? What specific intentions are you going after? How does your portfolio look now? What are some things that will prove challenging? 

Sometimes the hardest thing to do is getting started, so sitting down and answering these questions will help put you on the path to success. Many traders quit before even trying due to a lack of clarity and preparation. If you feel stuck at this stage, take courses, read books, find a mentor to get some momentum going, and keep moving forward. 

After defining your short-term and long-term goals, you can delve deeper by determining what kind of trader you want to be.determine the type of trader you aspire to be. Are you inclined towards short market interactions, or does a long-term investing approach appeal more? Finding what works best with your current schedule, assets, and time will help avoid issues in the future. Identifying your trading style and risk tolerance will be easier once you decide which path to embark on. 

The market is a vast playground for you to enjoy, so don’t pigeonhole yourself to a singular market because it’s popular or more straightforward. Test the waters with stocks, but remember other markets, such as forex, crypto, commodities, bonds, or housing, could also benefit your goals. Trading is a combination of many small decisions before you even risk your first dollar. Once you know where/how to proceed, you can start trading (in a simulator).

The Role of Simulators in Trading

Trading simulators provide valuable practice for both novices and experienced traders. The more practice you have, the cheaper your mistakes will be.

Among the various day trading strategies, trend trading and scalping are noteworthy. Trend trading involves tracking asset price direction and trading based on trend analysis. In contrast, scalping involves capitalizing on minor price shifts over very short periods. 

In other words, scalping takes a keen eye and enhanced focus during the day to find and seize micro-variations in price, so it might not be for someone who already works a full-time job and is looking to trade on the side. 

Swing trading, a popular form of day trading, predicts and capitalizes on short-term price changes over days or weeks (Craft, 2023).

Maximizing Success in Day Trading

Success as a trader is not just about when you are ready to start trading, you must ensure the market is ready for you too. Knowing when to enter the market is crucial because it can eat you alive if you jump in at the wrong time. A good rule of thumb to succeed in this time of trading requires two conditions first to be met: market liquidity and high volatility. These two conditions make it easier to enter and exit the market as they please.  

If you are serious about becoming a day trader as a side hustle, you must commit time, energy, and substantial capital to get the ball rolling. Generally, your starting capital should be reasonable (not too low or high), so the recommended investment is around $1,000. However, if that dips into money you can’t afford to lose, you can always start lower and prioritize more time in the simulator until you feel more comfortable.

Retail Trading vs. Day Trading

Post Gamestop, retail trading has become popular among younger generations. It demands less time and effort than day trading and offers the convenience of apps like Robinhood. However, with less experience and time to give to their trades, retail traders run a higher risk of running into issues with risk management, emotional regulation, and consistent income. Retail traders tend to take shortcuts to serve the need for immediate gratification, which can be detrimental to long-term success. 

In summary, if you’re considering stock trading, whether as a side hustle or a full-time career, ensure you’re well-prepared and informed. For more insight into how to get started on your trading journey, visit Trade Ideas today.

References: Day Trading as a Side hustle