Maybe you like the idea of trading, but maybe sitting alone in front of the computer for much of the day is not for you or maybe you don’t have the funds to do it right now or for whatever reason.
If trading is something you are very interested in, luckily enough there is a variety of alternatives to day trading.
Below is a list of day trading alternatives and alternative jobs that are similar.
1. Working for a Hedge Fund
A hedge fund is typically a private company that manages a pool of money for large net worth investors. If the hedge fund makes money it compensates itself for that service by taking a hefty management fee. A hedge fund will typically use a variety of trading strategies to make money such as taking both long and short positions.
There is a variety of positions that one can work within a hedge fund. One is working as a trader, where one can work as a senior trader or junior trader placing trades.
2. Proprietary Trading Firm
Proprietary trading, also called prop trading is where an individual can trade for a firm as an independent contractor. They can either trade remotely or at the firm’s offices. Some prop trading firms even allow inexperienced traders to trade with them and provide them with education and training before they get started.
Trading with a prop firm can be setup in a few ways. One way is where a trader can trade with the firms capital and the trader gets to keep a certain percentage of the profits made. Another way is a trader can put around $5,000 down and the firm provides the trader with substantial buying power leverage and the trader is able to keep all the profits.
3. Working as a Market Maker
A Market maker’s function is to aid in the making of a market in an exchange or a particular stock. They provide a very important role in the markets, in which they ensure market transactions are as smooth and continuous as possible and they provide liquidity for a stock. A market maker can work for a company, a broker-dealer, or a stock exchange.
A market maker quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread.
For example, the New York Stock Exchange (NYSE) and American Stock Exchange (AMEX) have Designated Market Makers, formerly known as “specialists”, who act as the official market maker for a given stock. The market makers provide a required amount of liquidity to the security’s market, and take the other side of trades when there are short-term buy-and-sell-side imbalances in customer orders.
Someone can work as a market maker as a representatives of a firm, a broker-dealer, or a stock exchange.
4. Work for an Investment Bank
Some banks such as Bank of America Merrill Lynch, J.P. Morgan, Goldman Sachs, Morgan Stanley, Credit Suisse and many others are always looking for talented individuals to work in certain areas of the company such as sales, trading, financing, prime brokerage, market-making and other areas.
5. Trading for an Agricultural, Energy, or Commodities Company
The options and futures markets were developed to help commodity companies manage their income and expenses better. That’s why the traditional products on those exchanges sound kind of funny in the era of modern finance: pork bellies, soybeans, and eggs.
But guess what? Those traditional customers for those traditional products are still active, and they need people to help them. Energy companies, growers, food processors, metal companies and among others need someone to trade. Things such as cotton, orange juice, cocoa, sugar, wheat, corn, barley, pork bellies, milk, feedstuffs, fruits, vegetables, grains, hay, livestock, meats, poultry, eggs, and other commodities.
These companies are often more interested in hedging, using trading to reduce risk rather than increase return. However, depending on market conditions or a company’s philosophies, they may be open to traders who want to take on risk and make a return.
6. Swing Trade
Swing trading is like a cross between day trading and investing. Swing trading is a style of trading stocks that attempts to capture short term moves in a stock. A swing trader will typically hold a stock for a few days to possibly a few weeks.
Many choose to do swing trading because it best fits their trading style or perhaps they might have a full-time job so they cannot “day trade”. Like day trading, in swing trading you can potentially capture explosive moves in a stock in a very short period of time.
7. Trade in a Demo Account
Trading in a demo account or paper trading is basically a simulated trading process in which you can practice trading without using real money. There are some websites out there that let you setup a free account so that you can paper trade. In addition, some brokerages offer you a chance to paper trade without having an account with them, such as SureTrader.
8. Signup for a Trading Contest
Each year, some big financial media companies offer trading contests. People can sign up for them and manage a paper portfolio, and the person with the greatest returns wins a cash prize.
One of the most well known that takes place every year is CNBC’s Million Dollar Portfolio Challenge http://milliondollar.cnbc.com