The information contained in this article not intended to be a substitute for legal or financial advice that can be provided by your own attorney, accountant, and/or financial advisor.
Day trading has long been a bit of a mirage for many. We have all seen day traders go viral on social media, but trust me, they are making it seem a lot easier than it actually is. Active trading takes a lot of skill, a lot of patience, and a lot of courage. After seeing the massive PnL gains that are posted, this is one of the most common questions I get from investors: How difficult is day trading?
To be frank, it’s difficult to be a profitable, long-term day trader. It requires a lot of knowledge about how the markets operate as well as some advanced trading strategies. Some day traders might make it seem simple, but usually, it takes years of trial and error to figure out a system that works for you.
So do I recommend day trading? I typically do not. Unless you are an experienced investor who has a higher risk appetite and knows how to read the markets day in and day out. For most of us, long-term buy-and-hold investing is probably the safest and least stressful way to build our wealth. You just need a little patience.
Is It Hard to Become a Successful Day Trader?
As with anything, becoming a successful day trader takes practice and dedication. If you are determined to become a day trader, I very much suggest educating yourself first. Take some YouTube courses and try day trading in a practice account. Day trading is not something you want to jump into blindly with your own real money.
Why is it so hard to become a successful day trader? It takes a certain type of personality to be able to stick to a system. Many traders get emotional and chase losing trades. Day trading is about execution and being able to control your greed. Once you have locked in a profit, exit the trade. It is the only way your account will be able to survive long-term.
Being a day trader also goes against everything we have been taught as investors. Rather than letting our investments compound over time, we are making quick trades and capturing as much incremental profit as possible when day trading. Do you have that discipline and dedication to get out when you are ahead in a trade?
Why is Day Trading so Difficult?
As I mentioned, day trading takes a lot more than just hitting the buy and sell buttons. There is actually quite a bit of technique that goes into it. These techniques are honed over time and even the best day traders can tell you that they have more losing days than they would like to admit.
The discipline in sticking to your strategy with each trade is what people often find to be the most difficult part of day trading. When a trade is going in your favour and it is already in the green, the natural instinct is to continue to let your profits grow. You shouldn’t think of day trading as a gamble or a get-rich overnight strategy. Not only does it take years to hone your skills but it isn’t even a guarantee you will get rich at all!
Day trading isn’t easy. Neither is waiting for your investments to grow over the years. The appeal of day trading is always the ability to grow your wealth without needing to let time do the work. While this is true, I’ll warn you now that you can also lose your money just as fast. There are no guarantees when it comes to the stock market, and day trading has a lot more potential risk involved.
How Can Someone Become a Day Trader?
The interesting thing is that anyone can become a day trader if they truly wanted to. There is no special education you need or minimum account balance. You can day trade on any platform and in most types of accounts. You can even day trade from the beach or from your bed. The thing about day trading is you can put as much or as little into trading each day as you choose.
I often get asked how to become a day trader. My suggestion is to start out small and slow. Put aside some funds that you can afford to lose and practice your strategy. Learn how to use stop losses and limit orders, and it doesn’t hurt to know how to trade options either. These can be a great way to hedge your trades and even capture more gains through things like spreads.
Finally, I would recommend learning technical analysis as it will certainly come in handy. Reading charts is one of the most important ways to learn how a stock or asset behaves. It also doesn’t hurt to find a brokerage with lower trading fees. Discount brokerages are great because some even offer zero-commission trading, which will certainly help you over the long run.
The Bottom Line: How Difficult is Day Trading?
Day trading is something that is doable for any investor. It does take some learning and some time to develop a proper strategy. Personally, it’s a bit too risky for me and I prefer long-term investing with some short-term trading but not every day. For those of you with a higher risk appetite and want to learn, I suggest learning technical analysis, stop losses, limits, and options. Day traders use all of these as tools to help them on a daily basis.
At the end of the day, you can make two trades or twenty trades per day. As long as you show discipline and stick to your strategy, you can eventually learn how to be a successful day trader.