Everyone has a different perspective on life and their idea of what pros and cons are to them. This is because the reward and loss each person receive from risk are different. Each person may see different facts and not always the entire picture. Everyone has a valid and different risk point of view. No single perspective is more significant or right than the other. As a decision maker, you must ensure you have evaluated all aspects and put them together correctly to make the best decision you can. Day Traders use pros and cons assessments when deciding to enter and exit a position. They also use this approach when deciding what tools to start trading with, trading opportunities, and what trading strategies to implement. These are one of many things to consider when making up a day trading pros and cons, strategy.
A pro is defined as an argument in favor of something, and a con is associated with an argument against something. The fact is that no matter what is going on in your life, you can’t predict what is going to happen from start to finish. We all make decisions every day that involve some type of risk. Sometimes we don’t understand all the risks and even when we do, we often ignore them. The same can be said about day trading, it is unknown which way the stock market will fluctuate at the beginning of the day or how the market will close first thing in the morning. We will go over the pros and cons of day trading, and hopefully, those points can help you become a better trader.
It’s Human Nature to Dismiss Risks
How many times have you heard “it won’t happen to me”, “If it hasn’t happened before, why would it now”, and “It will be different this time”. There are probably several decisions in your life that you’ve rejected the con rather than deliberately considered and accepted the con. As a day trader, an infective strategy or a strategy used poorly can place you in a position to lose a lot of money. Depending on the strategy the trader uses has a lot to do with their risk tolerance. Earnings from day trading can be small and may require patience and persistence to build. Especially if starting with a small account that limits you to three trades a week in a five-day period.
If you want to achieve something great, you will need to take risks not just as a day trader, but in every aspect of your life. Taking risks eliminates the possibility of looking back and asking, “what if?” Even if you fail, you’ll walk away with more experience and knowledge than when you started. You can lower the risk factor in day trading by practicing using the thinkorswim platform to perfect your entry and exits. You can turn what appears to be a con into a pro; simply by putting in the time to get better.
You Are Your Own Boss
I’m sure you’ve heard the saying nothing worth having comes easy. I spoke to you about perception at the beginning of this article, it’s something to think about when presented with being your own boss. You really need to take into factor what type of person you are, what drives you, and if you are willing to put in the work. A successful day trader needs to be self-motivated, disciplined, levelheaded, and financially independent. No one will push you, telling you to get up early to prepare or set time aside to practice. If you don’t feel these categories describe you, then day trading may not be for you, and you can lose money quickly.
You can work remotely and make your own schedule as your own boss. Once again, this can be seen as a pro for many and for others that need that office structure as a con. When thinking of your schedule, you need to think about market volatility. The morning and the last hour of the day are said to be the best time frames to trade. So that is an important factor to set yourself up for success. Self-motivation becomes important when you must put in the time before and after trades.
Are you going to put in the time to label your demand and support levels? Have you analyzed prior zones that may be helpful for future trades? Are you going to be disciplined enough to let the trades come to you instead of jumping into trades without following your strategy? Are you going to remain levelheaded and keep emotions out of your trading decisions? Do you monitor trading volume? You need a well thought out strategy and to scope out the current market environment before entering trades.
Generally speaking, many traders typically suffer severe financial losses in their first months of day trades, that is why assessing your day trading pros and cons constantly is a must! This is simply because it is a learning period and the stock market can be intimidating. An important thing to keep in mind to not dig yourself into a deep hole is don’t trade more money than you can afford to lose. The reason for this is that it is possible you may lose it. Don’t use the money they will need for daily living expenses, retirement, take out a second mortgage, or use their student loan money for day trading. Start out with a small account that you can grow over time; this isn’t a race.
At a regular job, how long or how many hours would you have to put in to be in a position you feel financially secure? Wouldn’t you have to work overtime or any left-over money you have from paying the bills you set aside for savings? So then how would this be any different with day trading? Set the money aside you can day trade with and the profits you make don’t move it, keep it in account to grow your account. Just like you would have kept the money in your savings account. Regular jobs look at the past performance to give raises or incentives; think of it that way when you go back to review your trading day.
Whatever your motivation may be, every person works with the desire to be able to be financially secure; whether it’s for yourself or your family. Day trading requires less time than working a regular 9-5 job to generate more income and reach the comfort you are looking for. Some day traders only make one or two trades a day, which they would then be done with their workday. These traders however are using a solid trading strategy and continuing to practice using their strategy.
Summary: Day Trading Pros and Cons
I’ve listed a few day trading pros and cons to consider. My goal has always been to help as many day traders achieve their personal financial goals, whether they are novice traders or experienced traders. Using a simple “pros” and “cons” list encourages you to approach your decision objectively. I am hopeful these pros and cons will encourage you to not let your “gut feeling” impact your choice when trading. You learned that it’s human nature to dismiss risk; now you know what you need to focus on to avoid that.
You learned that you could be your own boss and what it entails when there is no one around to keep you accountable. Finally, we explored financial security with day trading that you can achieve if you use a proven strategy and are patient. With the MK strategy, I have helped traders whether new or experienced have a success of either 80% or better on their trades. I know this could be you as well; all you have to do is apply yourself.
To Learn More
Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”