Can I Make $1,000 a Day by Day Trading? (2024)

Can I Make $1,000 a Day by Day Trading? (1)

dima_sidelnikov / iStock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

Day trading — the process of buying and selling one or more stock positions within the same day — can be very lucrative. It can also be very risky. While it’s not outside the realm of possibility to earn $1,000 a day by day trading, reaching that level on a consistent basis requires several things: knowledge, discipline and a lot of cash to start with.

Here’s what you need to know.

See: 3 Things You Must Do When Your Savings Reach $50,000

What Is Day Trading?

Day trading means actively buying and selling stocks within the same day — sometimes within minutes or hours. Day trading takes advantage of the frequent fluctuations in the prices of stocks. An example of day trading would be buying shares of a company early on a day when the company is expected to announce a new product that will likely impact the stock price. If the stock jumps, the day trader would then sell those same shares they just bought, realizing a quick profit.

Margin Trading

Day trading sometimes involves borrowing money with which to trade. This can take the form of margin trading, which means that you borrow against the securities in your brokerage account to buy additional stocks. Borrowing the money to buy more investments prevents you from having to sell your investments to generate the cash to buy more. The downside is that if the investments you buy on margin don’t perform well, you will have to sell your original investments to pay off the margin balance in your account.

Here’s an example. Suppose you buy 10 shares of XYZ Corp. for $50 per share, for a total purchase price of $500. XYZ Corp introduces a revolutionary new product, and the stock price soars to $75 per share. You sell your position and take a profit of $250, or 50% of your original investment.

If you bought those XYZ shares on margin, you would pay just $25 per share, borrowing the remaining $25 per share from your broker. You would spend just $250 to make a profit that comes out to close to $250, or a return of nearly 100% on your investment.

So why doesn’t everybody buy on margin? Here’s the downside. Suppose, instead of rising to $75 per share, XYZ Corp. dropped to $25 per share. You’d lose 50% of your original investment if you had bought the stock outright. But you would lose 100% of your investment if you bought on margin. In addition, when you buy on margin, you have to pay interest to your broker, so you’d actually make a little less than 100% in the first example, but you’d lose more than 100% in the second.

Options Trading

Day traders sometimes take part in the buying and selling of options, which can include puts and calls. Options are essentially a bet on the direction a stock will move. An option gives an investor the right, but not the obligation, to buy or sell a specific security at a specific price (called the “strike price”) at a future point in time.

In order to make money buying or selling puts or calls, you need to be confident of which way the stock will move. When you buy a put, you are buying the right to sell 100 shares of a particular stock (the “underlying security”) at a specified price in the future. If you buy a put, you are betting that the share price will decrease before the put expires. Then you can purchase the stock at the then-current price and sell it according to the terms of the put, which is at a higher price.

When you buy a call, you are buying the right to buy 100 shares of a particular stock at a specified time in the future. In this scenario, you are betting that the stock price will rise above the strike price between the time you buy the call and the time it expires, so you can buy the stock at a lower price than it is currently trading at, and immediately sell it for a profit.

Buying and selling options is not the same as day trading, since options are for the right to buy or sell at a future date. But puts and calls can be bought and sold by day traders. Depending on the movement of a stock on a given day, the value of a put or call may go up or down, which can result in gains or losses for day traders.

What Factors Affect How Much Day Traders Can Make?

The amount of money day traders can make depends on a number of factors, including how much they have to invest, how much risk they are willing to take, how knowledgeable they are and, frankly, how lucky they are.

The amount of money available to invest is a big factor. If you’re starting out your day trading career with a bankroll of a million dollars, you could potentially make a lot more than someone who’s starting out with $1,000. You would have the resources to take advantage of many more opportunities the minute they come up, which is, after all, the secret to day trading.

How Can a Day Trader Make $1,000 a Day?

In order to make $1,000 a day by day trading, you have to have a lot of money — or margin — to start with. Rare (if not extinct) is the stock that doubles its price in a single day. Even a price increase of 10% in a single day is very uncommon.

In order to make $1,000 in a day on a stock that increases 10% in a day, you would have to invest $10,000 in that stock. If you wanted to trade on margin, you could invest a little more than $5,000 and still make $1,000 on that trade. What might be more realistic would be to attempt to find a stock that goes up 2% in a day, which would mean you would need to invest $50,000 (or $25,000 on margin, plus the interest).

Finding these kinds of investments day after day is exceedingly rare. Although it’s possible to make $1,000 (or even more) in a single day when you are day trading, sustaining that level of gain over time is very, very difficult.

What Are the Risks of Day Trading?

Remember that if you trade with enough volume and frequency to make $1,000 a day by day trading, you must also be prepared to lose $1,000 a day. Any stock you buy with the intention of selling very soon after at an increased price has an almost equal likelihood of falling in price, leaving you with a loss. So, day trading, especially at these kinds of numbers, is not for the faint of heart.

Day trading has seen increased interest in the past few years, primarily due to the explosion of so-called “meme stocks” such as GameStop and AMC. These are stocks whose prices were manipulated by day traders who communicated with one another to inflate the prices by buying up large investments in these stocks. They drove the prices up in this way, and then quickly sold, leaving the investors who got in just a little too late holding the proverbial bag — with a portfolio full of shares they had paid a bundle for, that were now close to worthless. The meme stock trend demonstrates the risks of day trading. Most day traders are no wiser than other investors, so they are often buying and selling based on the same information everyone else has.

FAQ

  • Is $1,000 enough for day trading?
    • Yes. You can begin day trading with $1,000 or even less. You may not be able to give up your day job if you're day trading with $1,000, but you can certainly get a feel for it. It's a good idea to start small because you should only invest as much as you're willing to lose, especially in a risky venture like day trading. If you are a "pattern day trader," or someone who executes four or more day trades in a margin account within five days, you are required to have an account balance of $25,000, according to FINRA regulations.
  • How much can you realistically make as a day trader?
    • This depends on how much money you have to invest, how willing you are to take on risk, and how knowledgeable you are about the companies you'll be investing in. You also have to have some luck on your side. You could make several thousand dollars a month by day trading if you start with a good-sized investment portfolio and make good investing choices.
  • How much money do day traders with $10,000 accounts make per day on average?
    • Over time, a skilled day trader might average a 2%-3% return on their investment daily, assuming they do considerable research on potential investments. Therefore, someone with a $10,000 account might make $200-$300 per day.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

Can I Make $1,000 a Day by Day Trading? (2024)

FAQs

Can I Make $1,000 a Day by Day Trading? ›

Even a price increase of 10% in a single day is very uncommon. In order to make $1,000 in a day on a stock that increases 10% in a day, you would have to invest $10,000 in that stock. If you wanted to trade on margin, you could invest a little more than $5,000 and still make $1,000 on that trade.

Can you make money day trading with $1000? ›

Believe it or not, you can start forex day trading with $1,000 or even less. It requires mastering position sizing and managing risks, but if you navigate your way to success, the rewards can be significant.

Is it possible to live off day trading? ›

4% of people were able to make a living with adequate capital, access to mentors, and practicing multiple hours every day during the week. Roughly 10% to 15% could make some money, but not enough to make it worth their while to continue trying to do it for a career.

How much money do day traders with $10 000 accounts make per day on average? ›

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

How much money should you have to start day trading? ›

First, pattern day traders must maintain minimum equity of $25,000 in their margin account on any day that the customer day trades. This required minimum equity, which can be a combination of cash and eligible securities, must be in your account prior to engaging in any day-trading activities.

How much money do you need to day trade for a living? ›

And the PDT rule states that you must maintain a minimum account balance of $25,000 if you want to day trade more than three times a week. Now there's ways around it and there's ways you can work within the PDT rule. So if you've already got 25,000 or more, then you don't even really have to worry about that.

Why do most day traders fail? ›

The Biggest Reason Most Day Traders Fail

When there is a large lottery jackpot, day trading activity declines. Many day traders with a gambling mindset have moved to cryptos and have lost even more money even faster. The less capital a trader has, the more likely they are to take extreme risks.

Do most day traders fail? ›

According to various studies and industry observations, it is estimated that around 80% to 90% of day traders eventually quit within their first year.

How realistic is it to be a day trader? ›

High probability of losses.

A study of 1,600 day traders over the course of two years found that 97% of individuals who day traded for more than 300 days lost money. Succeeding in day trading takes more than diligence and education, but a significant amount of luck.

Can you make $200 a day day trading? ›

A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.

How many hours do day traders work? ›

Most independent day traders have short days, working two to five hours per day. Often they will practice making simulated trades for several months before beginning to make live trades. They track their successes and failures versus the market, aiming to learn by experience.

Do day traders pay taxes? ›

How day trading impacts your taxes. A profitable trader must pay taxes on their earnings, further reducing any potential profit. Additionally, day trading doesn't qualify for favorable tax treatment compared with long-term buy-and-hold investing.

Who is the most profitable day trader? ›

There are a lot of successful traders but Jesse Livermore is often regarded as the most successful day trader.

Which type of trading is most profitable? ›

The defining feature of day trading is that traders do not hold positions overnight; instead, they seek to profit from short-term price movements occurring during the trading session.It can be considered one of the most profitable trading methods available to investors.

Who are the richest day traders? ›

A Historical Perspective on Wealthy Day Traders
TraderNotable Trade
WD GannVarious successful trades over his career
George Soros1992 short position on the British Pound
Richard DennisTurtle Trading in the futures market
Paul Tudor JonesPredicting and profiting from the 1987 crash
2 more rows
Jan 15, 2024

Is $1000 enough to start investing? ›

If it's your first time investing, you may want to invest $1,000 in an exchange-traded fund (ETF). A beginner-friendly alternative to traditional mutual funds, ETFs contain a mix of stocks, bonds, and other securities, giving you access to a broad range of asset classes within a single fund.

Can you day trade with $5,000 dollars? ›

A day trade is when you purchase or short a security and then sell or cover the same security in the same day. Essentially, if you have a $5,000 account, you can only make three-day trades in any rolling five-day period. Once your account value is above $25,000, the restriction no longer applies to you.

Can you day trade with $2000? ›

You must follow the same margin requirements if you're an occasional day trader, meaning you must have a minimum equity of $2,000 to initially buy on margin and meet the Regulation T requirements . You must have: 50% of the total purchase amount. Keep at least 25% equity in your margin account.

Can you make money day trading with $500? ›

With careful planning and execution, it is possible to start day trading with just $500. However, you need to be aware of the risks and be prepared to lose your investment.

Top Articles
Latest Posts
Article information

Author: Dean Jakubowski Ret

Last Updated:

Views: 5922

Rating: 5 / 5 (50 voted)

Reviews: 81% of readers found this page helpful

Author information

Name: Dean Jakubowski Ret

Birthday: 1996-05-10

Address: Apt. 425 4346 Santiago Islands, Shariside, AK 38830-1874

Phone: +96313309894162

Job: Legacy Sales Designer

Hobby: Baseball, Wood carving, Candle making, Jigsaw puzzles, Lacemaking, Parkour, Drawing

Introduction: My name is Dean Jakubowski Ret, I am a enthusiastic, friendly, homely, handsome, zealous, brainy, elegant person who loves writing and wants to share my knowledge and understanding with you.