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Pros and Cons of Day Trading

By Dave

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Pros and Cons of Day Trading

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Day trading can be a rewarding career that allows you to be your own boss and make a significant amount of money from the market. But it can also be difficult to find success as a day trader and many who try it out don’t stick with it for the long term.

So, is a career as a day trader right for you? We’ll take a look at the pros and cons of day trading that you should consider before making the leap.

What is Day Trading?

Day trading involves buying and selling stocks or other assets for a profit. The goal of each trade is to make money and trades usually only last a few hours. Day trading requires a strong understanding of how to analyze the market in real-time and how to limit your risk while trying to turn a profit.

Pros And Cons of Day Trading

Full-time day traders rely on trading for their income and often treat it as a job much like any other. However, unlike for other jobs, day trading requires you to put your own money on the line every single day. That can make day trading feel relatively high-stakes, which can be either a positive or negative aspect of trading depending on your perspective.

Day Trading vs. Investing

It’s important to distinguish day trading from investing. Day traders are active in the market every day and their goal is to make money on short timescales of a few hours per trade. Investors, on the other hand, have timescales that typically range from weeks to years. Investors may check in on the market every day, but they don’t need to monitor it on a daily basis in the same was as day traders.

Day traders and investors may also rely on very different approaches to the market. Day traders are primarily concerned with technical analysis and look at price patterns to determine which way an asset will move in the immediate future. Investors are often more concerned with fundamental analysis, which considers a company’s financial performance to determine if its stock price could rise in the medium-term to long-term future.

Pros of Day Trading

Let’s take a closer look at some of the benefits of day trading.

Pros And Cons of Day Trading - Pros

Be Your Own Boss

One of the things that attracts many people to day trading is that it enables you to be your own boss. You get to choose what days and hours you work, where you work from, and more. For self-motivated individuals, turning to day trading full-time can be as rewarding as launching your own business. Of course, day trading as a career is not easy and may take years of trial and error. Day trading statistics show that the odds are against you, however, that shouldn’t deter you. While it can be difficult to make a career out of trading, the ability to be your own boss for life makes the pursuit worth it.

Trade from Anywhere

Day traders today have the ability to work from anywhere they can get internet access. The only other thing they need is a computer or even just a smartphone (although most serious traders will require a computer).

Many traders have elaborate office setups with multiple monitors and advanced software. This can make it less easy to trade from anywhere, but it can be nice to have the option to travel while working and earning money. Traders who travel frequently will often get a mobile setup that includes a laptop and portable monitors.

Unlimited Earning Potential

Unlike employees at a traditional salaried job, day traders don’t have a limit on how much they can earn. Traders can potentially increase their earnings by deploying more capital in their trades or spending more hours trading. A few large, successful trades could potentially boost your earnings for the year significantly.

There is no cap on how much you can earn as a trader. There are traders making 5 figures, 6 figures, 7 figures, and beyond. The unlimited growth potential is what drives many traders to continue seeking new challenges.

No Overnight Risk

Day trading is often thought of as riskier than investing – and it is. BUT there is one exception.

Day traders typically close out all of their positions before the close of the market each day. This means that traders don’t have to face overnight risks such as unexpected news or earnings reports moving the price of a stock while they’re away from the computer. When day traders log off for the day, they can fully detach from the market.

Day traders who only hold positions intraday can come to the market with a blank slate every day.

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Higher Returns than Investing

Day trading can potentially yield higher returns than investing because traders recycle their capital on shorter timeframes. Say you start trading with $10,000. You could deploy that $10,000 and any profits in trades hundreds of times over the course of the year as a day trader, compounding your return. An investor with a timescale of several months might only deploy their capital a few times over the same year.

The potentially higher returns of day trading are important because they justify the extra work that goes into day trading compared to investing.

While investors may strive for annual returns of 10%, it’s very possible that day traders can achieve those same returns in a week or even a day.

Enjoyable Challenge

Many day traders enjoy the challenge that this line of work presents. Every day in the market is slightly different and traders are never guaranteed to make money, so successful trades continue to feel rewarding even for experienced traders. In addition, market conditions can change over time, requiring traders to continuously refine and adapt their strategies.

Cons of Day Trading

While day trading can be rewarding and profitable, it also entails a significant amount of risk. Let’s look at some of the drawbacks of day trading.

Pros And Cons of Day Trading - Cons

Low Odds of Success

The unfortunate truth is that the vast majority of people who try day trading don’t succeed at it in the long run. Studies have found that 80% of day traders lose money in their first year. A 15-year study of day traders in Taiwan found that only 1% of traders were able to beat the market.

Even traders who are successful for a while may later find that they’re not able to adapt to changing market conditions and be forced to leave day trading as a full-time job.

Time Consuming

While day trading gives you the flexibility to choose your own work hours, it also requires a lot of work. Day traders need to spend a long time learning how to trade, developing a trading strategy, and proving that it works through paper trading.

Once you start trading full-time, you then need to watch the market closely for most of each day to find, execute, and monitor trades. Day trading can involve a lot of screen time and the work involved can add up to more than 40 hours per week.

Losing Money is Part of the Job

An aspect of day trading that many traders struggle with is that losing money is part of the job. Even the best day traders don’t try to win every trade and there are certain to be days when you lose more money than you make. Losing money can be emotionally taxing, even for experienced day traders.

No Secure Income

While your potential income from day trading is unlimited, you also don’t know how much you’ll make in any given year. Even experienced day traders can have bad weeks, months, or even years when their income drops significantly. In the worst cases, traders can have years in which they actually lose money – that is, make a negative income for the year.

Adapting to not having a secure income can be challenging. You need to find ways to make sure that your expenses can be paid even when your income from trading declines unexpectedly.


There are pros and cons to being a day trader. Day traders can potentially make good money from trading while acting as their own boss, but there’s no guarantee of success. Many day traders lose money and even experienced day traders can go through rough patches. It’s important to consider both the benefits and drawbacks of trading before trying out a career as a full-time day trader.

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Dave has been a part-time day trader and swing trader since 2011 when he first became obsessed with the markets. He focuses primarily on technical setups and will hold positions anywhere from a few minutes to a few days. Over his trading career, Dave has tried numerous day trading products, brokers, services, and courses. He continues to test and review new day trading services to this day.

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