21+ Pros and Cons of Being a Day Trader (Explained)

A day trader is a trader who executes the volume of short and long trades to capitalize on intraday market price action. The objective is to profit from very short-term price movements however they can also use leverage to amplify returns, which can also amplify losses. 

While many strategies are employed by day traders, the price action sought after is a result of temporary supply and demand inefficiencies caused due to sale and purchase of the asset. 

Advantages of being a Day TraderDisadvantages of being a Day Trader
Be Own BossLose more than earn
More than One Way to WorkIt is research-intensive
No Overnight RiskDay trading is stressful
One can make serious money quickly.Requires more discipline
Can trade from anywhereDisadvantage
Return on investmentPattern day trader rule
New avenuesOvertrading

Advantages of being a Day Trader

Be Own Boss

By making day trading full-time jobs one is always the one in total control over own investments and ultimately profit. A day trader means one sets his own hours, governs his own actions, and only does what he truly believes in.

For a day trader, the market is a ground where he can take position as per his own forecast of the market. The main reason people are attracted to investing as a career is that they gain total personal liberty over their day.

More than One Way to Work

As there are multiple day trading strategies one can employ to find the right one for them. It leaves room open for more flexibility, which is often hard to find in other types of investment.

While the analytical and problem-solving types, nothing can be more thrilling than assessing the current market and deciding what course of action to take next, there’s always a little risk, but that’s part of the thrill.

No Overnight Risk

A long-term trade investor must worry about the stock market crashing and losing thousands of dollars in just a few hours. The day traders never have to worry about overnight changes.

Even if it is an economic downfall, political strife or some business scandal that causes a company’s stocks to tank, you will be able to quickly make decisions without having to lose major shares in the process.

One can make serious money quickly.

The discipline and consistently executing a profitable strategy can grow our trading account substantially. Day traders usually have access to leverage.

The leverage is borrowing money from a brokerage company to purchase additional shares of company stock. A seasoned trader keenly watches the movement in price and grabs the opportunity to make a fortune. There are several successful stories throughout the internet motivating one to trade.

Can trade from anywhere

One can trade from any remote place on a wireless internet connection. There are trading platforms for tabs, laptops or even mobile. One can watch the market and place suitable positions when and where they want.

The traders are not restricted to a cubicle or an office. Day trading also offers a lifestyle of independence and freedom. It lures people to participate in day trading. 

Return on investment

Returns on investment compound more quickly if day trading is profitable. One may be able to take the profits from the previous trading day to trade a larger position the following day and generate even greater profits.

Thus, it may require overall less time to generate substantial profits. Many day traders only make one or two trades a day, and generally, make them early in the day.

New avenues

With the advent of futures, options, commodities, and currencies, newer avenues of generating income have opened. One may hedge his position to their benefit. Many financial institutions hire day traders to manage their position by taking counter positions in the future or options for the day.

A day trader in currency can be hired to study the movement of a particular currency in which a firm is willing to trade.

Disadvantages of being a Day Trader

Lose more than earn

Day trading is sometimes referred to as a scam and this is true for people who are tempted by certain apps or clubs. One may lose thousands of dollars in the hopes of becoming rich only to be in crippling debt.

The more one trades, the more he has to lose, and the stakes can be unfathomably high for someone putting their entire savings on the table.

It is research-intensive

Achieving success in this business requires thorough planning, something that many newcomers are either unsure how to do or unwilling to do.

One will spend hours in front of the computer every day checking the market, keeping a spreadsheet, and plotting out their next investment. One needs to be good at bookkeeping and not rely on an app to handle the entire thing.

Day trading is stressful

Day trading is stressful primarily due to the learning curve. Understanding the financial markets takes time and it can be frustrating when the results are not immediate. Moreover, in the process, losses can begin to erode the trading capital.

The day traders get tempted to veer outside of their trading plan when losses start to mount. While managing emotions is critical for a trader’s success it means not allowing their own mistakes to override their decision-making for future trades.

Requires more discipline

Day trading requires greater discipline and focus. The day traders execute more trades on a volume basis than any average investor. Day traders have to constantly monitor their trading plan and ensure that trades directly align with their trading rules.

While It is tempting to jump in and out of a stock that gains interest, however, if the trade does not align with their trading plan, day traders should not place the trade.


With the age of algorithmic trading, traders are at a disadvantage against firms that participate in high-frequency trading. High-frequency trading is a type of algorithmic trading in which a large volume of shares is bought and sold at very high speeds, often at milliseconds. Day traders have to compete against the machines, and we know the machines always win.

Pattern day trader rule

If a trader has a margin account of less than USD 2000 and buys and sells four or more stocks on the same day in a five-day period is called a pattern day trader. The securities can include stock options and short sales. Their average annual income is USD 80000.


Many traders lose money in the financial markets due to overtrading and the inability to follow their trading plans. Stock trading is not gambling, and a trader must view investing as a business.  Irrespective of the fact that one gained or lost, he will be tempted to trade again.

day trader pros cons

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