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How do you make money day trading?

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Quick Answer

The Motley Fool notes that in order to make money day trading it's beneficial to operate a brokerage that receives commissions for every sale or purchase that a day trader makes. It's also recommended that a day trader allow other traders to borrow from him on margin, which can bring in money through the interest payments.

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Full Answer

Day trading is defined as quickly selling and buying stocks within a day's time, often only keeping stocks for a short amount of time. According to The Motley Fool, day traders stand a roughly 80 percent chance of failure. Traders are better off selling day trading software and joining up with companies that sell day trading seminars for several thousands of dollars.

Companies that have high betas, which are companies that are more volatile than a majority of the market, can present day traders with good opportunities to earn a profit. A trader is better off locating well-run organizations that have a competitive advantage, doing his due diligence and equipping himself with patience in order to truly make money in the day trading industry, notes The Motley Fool.

A day trader should also factor in the taxes that he has to pay the IRS when determining how much he can make while day trading. The reason traders have to pay taxes is because day trading is considered a short-term capital gain, says The Motley Fool.

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