Is Day Trading Right for You? Pros & Cons Explained!

Who is a Good Fit for Day Trading?

Hello everyone. Today we're going to talk about what kind of person is suitable for day trading. Day trading, as a job, whether full-time or part-time, what kind of person is suitable to engage in this work? In this video, I will share some of my views with you.

Advantages and Disadvantages of Day Trading

First of all, as a job, day trading has both advantages and disadvantages. Let's look at the advantages first.

Advantages of Day Trading

1. High Income Potential: The income ceiling is high. This job mainly depends on the trader's personal level. The higher his level, the more stable his profit, the more funds he can obtain, and the more funds he dares to invest. Accordingly, his income will be higher. This income can almost be said to have no upper limit.
2. Flexible Working Hours: First of all, this job will never have overtime. The market is only open for six and a half hours, so you have no opportunity to work overtime. Flexible working hours means that you can trade at the opening, in the middle of the session, or at the close. You don't need to be there for the entire six and a half hours. You can work one hour, two hours, or three hours, depending on you, as long as you can achieve your final annual target or your personal daily profit target. So, you can end work.
3. Location Independence: Broadly speaking, as long as there is internet access in the world, you can engage in this job. It is not restricted by geographical location. This is something that other jobs, or most other jobs, cannot compare with.
4. Autonomous Decision Making: You don't need to discuss with colleagues, and you don't need to wait for superiors to approve. You decide for yourself what to buy, how much to buy, and when to buy. How much to sell and when to sell are all decided by you. Self-determination brings a strong sense of self-control.
5. Rapid Feedback: You get results on the same day. We often jokingly call day traders people who do a job settled daily. After the day ends, you know how much money you made today. This quick feedback is also, I think, an advantage of this job.
6. Low Barrier to Entry: Now, unlike before, when the barrier to entry may have been slightly higher, now these trading platforms basically have much lower costs when you trade stocks. The barrier to entry has been greatly reduced. If you want to enter the industry as a trader, it is relatively simple. With basic start-up capital, you can start. If you consider day trading as a start-up project, it is a typical low-cost start-up.

Disadvantages of Day Trading

1. High Risk: This can be said to be a unique risk to the trader's job. If you do other jobs, you may at most not earn money, but if you don't do this job well, you will lose money.
2. High Pressure: Anyone who has done day trading knows that every entry decision and every time you watch the market, whether it's setting stop-loss or take-profit, the pressure is very high. At this time, your own ability to withstand pressure is tested. If you have a strong ability to withstand pressure, then there is no problem. But if you don't have a strong ability to withstand pressure, then it is likely that your emotions and mentality will be affected, and then you will make some mistakes.
3. Significant Emotional Impact: Everyone has experience with this, or broadly speaking, everyone who speculates in stocks may have experience with this. For example, you are inexplicably unhappy just because the market fell by one point today, or you are inexplicably happy just because your position rose by one point today.
4. Long Learning Curve: Although the barrier to entry is low, the learning time after getting started is very long. You can say, "I can start day trading" after you learn to trade. But the time it takes from being able to place orders and trade to being able to make stable profits is very long, like nine months, a year and a half, two years, or even three to five years.
5. No Income in the Early Stages: During the learning and practice period, which may be nine months, a year and a half, or two years, there may be no income. When you decide to engage in this job, you may have to think about what your source of income is.
6. Unstable Income: When the market is good and conforms to your trading strategy, you can make more profit. But there is always a period of time when it does not conform to your trading strategy. Your income will be lower. Your income curve is not like other people's. Other people know that they have signed a contract and their annual salary is so much, and they receive their salary every two weeks or every month. Their income is stable. But this is not the case. This income is sometimes high and sometimes low. This is also a characteristic of the job.

These are the advantages and disadvantages of day trading as a job that I have summarized.

What Kind of Person is Suitable for Day Trading?

Let's see what kind of person is suitable for day trading.

1. High Discipline: It is most important to be a person who abides by discipline. Strictly execute the trading plan, enter the market with a stop-loss and take-profit. Do not deviate from the plan because of greed or fear. Do not deviate from the strategy because of emotions or market fluctuations.
2. Calmness: Simply put, it means emotional stability. Day trading fluctuations are drastic. If you are doing some leveraged financial products, it will be even more drastic. Price changes drastically in a short period of time. Be able to remain calm under pressure and not panic because of losses or become overly excited because of profits.
3. Strong Risk Awareness and Pragmatism: Don't think about getting rich overnight and don't have a fluke mentality. Because day trading risk is relatively high, don't harbor any illusions or pursue overnight riches.
4. Strong Competitive Awareness: Day trading is competing with other traders. Suitable people usually like challenges and enjoy the excitement brought by competition.
5. Decisiveness and Strong Execution: Don't hesitate. Enter the market when you should enter, stop-loss when you should stop-loss, and take-profit when you should take-profit. Once you are determined, then do it.
6. Patience and Focus: The pace is fast, but you need to patiently wait for the best trading opportunities. Highly focused and not distracted by the outside world.
7. Strong Stress Resistance: Because day trading is a job with high pressure, you need someone with strong stress resistance.

8. Independence and Confidence: This is a must. Independence is also determined by the characteristics of the job. Because you cannot ask anyone when you are actually buying and selling. All transactions need to be decided independently by the trader.

9. Flexibility and Adaptability: You need to be able to adjust to market changes and adjust your strategy accordingly.

10. Eagerness to Learn and Good Learning Ability: These trading methods, indicators, and strategies actually have some new changes every year or after a period of time. We should also adjust accordingly to these new technologies and strategies.

Unique Characteristics of Day Traders

As a day trader, what unique characteristics do you have that other jobs do not have?

1. High Tolerance for Uncertainty: Ordinary people often pursue stability. Day traders are accustomed to seeking profit in uncertainty.
2. Ability to Recover Quickly from Failure: After being repeatedly educated by the market, we must have the ability to stand up again after being educated and enter the market again.
3. Sensitivity to Numbers and Patterns: The feeling of looking at K-line charts before and after learning day trading is definitely different.
4. Fast Decision-Making Ability: The opportunity to place an order is often only a few seconds or a dozen seconds.
5. High Attention to the Market: The long-term high concentration of attention is also rare among ordinary people.
6. Unique Understanding of Risk: Day traders must be good at finding returns in risk.
7. High Demand for Self-Control: Day traders can remain calm in emotional fluctuations.
8. Keen Perception of Market Sentiment: Day traders have the ability to sense changes in market sentiment and use these fluctuations to trade.

Conclusion

It is important to emphasize that day trading has disadvantages such as high risk, high pressure, significant emotional impact, long learning time, no income in the early stages, and unstable income. Everyone must carefully choose this job. I personally suggest that if you are interested, you can try it out on a simulated account first before using real money.