Pros and Cons of Day Trading for a Living | Investment U

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Day trading for a living is no easy task. In fact, it’s a full-time job. And the risks can pile up if you don’t know what you’re doing or you lose focus. However, you can also bring in massive returns on a daily basis if you put in the research and make the right plays.

So, is it worth becoming a day trader? Let’s take a deeper look at the pros and cons of day trading.

Pros of Day Trading for a Living

Day trading is the process of buying and selling stocks within a single trading day. And for most traders, this means making multiple trades before the closing bell.

Now, there’s a variety of day trading strategies to choose from. And each will vary in its concepts. This is one of the best aspects of day trading for a living.

You can work at your own pace as long as you develop a plan and stick to it. Some day traders like to make their moves early in the day while others will wait until the final hours of the stock market.

Either way is fine. And that is completely up to you to decide. You set your own pace and strategy before fine tuning it as you gain more experience.

Another great advantage of becoming a day trader is your ability to avoid overnight risk. This is a benefit that long-term investors don’t have.

Day trading is a buy and sell quickly concept. You aren’t holding onto stock for any longer than a few hours at most, outside of the rare exception. So, this completely removes the overnight risks. These risks include unexpected economic, political and miscellaneous company news that may affect the stock price of any given business.

Even rumors can make a stock fall off a cliff. That’s why anyone day trading for a living will use stop losses, trailing stops and profit targets.

Cons of Day Trading for a Living

As you can see, removing risk is as important as anything for day traders. And that’s because there’s so much of it.

According to the U.S. Securities and Exchange Commission, day traders typically suffer severe financial losses in their first months of trading. And many of these individuals never graduate to profit-making status.

This is because day trading for a living is extremely stressful and an expensive, full-time job. And speaking of expensive; the legal minimum balance required to day trade stocks is $25,000.

That’s a lot of capital to begin with. And it’s clear you need money to make money as a day trader. Even day trading on Robinhood is a process.

The balance requirements will push many investors away from day trading, but time is another hindrance that cannot be understated.

Day trading as a hobby is a recipe for disaster. In fact, this should be treated as a full-time job.

It will require long nights and early mornings of intensive research and analysis. You will need to scour the web for every tiny bit of information you can find to ensure you’re making the right decisions.

Even after closing, anyone day trading for a living will need to assess their transactions and begin their research for the next day. It’s a constant process that will cost you countless hours in front of a computer.

Growing Number of Day Traders

There are currently more than 13 million day traders around the world. And this number is sure to grow as the interest in investing rising. It certainly has its perks and becoming your own boss is one of them. But every decision you make can break the bank if you aren’t on top of your game.

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