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Is Day Trading Worth It? What New Traders Should Know First

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Written by Timothy Sykes
Updated 7/15/2021 17 min read

I often get a lot of DMs and comments asking the same question again and again: Is day trading worth it?

Newbie traders are intrigued by the success others find in day trading. They’re curious to try it themselves, but they’re also afraid of failure.

This is understandable. After all, 90% of traders FAIL.

I can’t guarantee that you won’t fail. But I can promise you that if you work hard and STUDY, you’ll be on the road to thinking for yourself. That’s priceless.

The stock market is a scary place. If you don’t stay disciplined and stick to your plan, you could make bad trades, lose money, or worse (more on that later).

On the flip side, if you develop a strategy that works for you, day trading can be exciting, challenging, and rewarding. Just look at some of my top Challenge students.

Is day trading worth it? The key is to start trading the right way. Ready for the first steps I teach all my trading students? Check out my 30-Day Bootcamp — it can help you understand my approach to trading FAST.

So, is day trading worth it? Let’s find out.

What Is Day Trading?

Day trading is when you buy a stock (or any risk asset) and sell it within the same trading day.

While swing traders and investors tend to hold stocks longer, day traders are in and out of positions in minutes. Sometimes multiple times per day.

Successful day traders understand that patterns often repeat. With hard work, studying, and experience you can learn to identify these setups and trade them over and over again.

Is Day Trading Worth It?

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Sounds like a lot of work, right? You’re probably wondering: is day trading worth it?

That depends on you. Are you willing to work hard and study? Are you ready to do everything you can to sell into strength and cut your losses quickly?

If the answer’s yes, day trading could be worth trying.

But understand that even if you follow these rules, there are no guarantees in trading. You still need to set realistic goals and trade with a size that suits you.

Never risk more than you can lose. And don’t worry about what other day traders are doing. Do what works for you.

How Does Day Trading Work?

Day trading works much like trading over a longer period, with a few key differences.

Buying on Margin

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To day trade, you may need to ditch your cash account for a margin account. But what are the differences?

In a cash account, you can buy and sell securities only with the money you have in your account.

With a margin account, you can borrow a certain amount directly from your brokerage. Of course, that means fees and interest rates. But that’s one cost of day trading.

You also must maintain a minimum equity requirement in your margin account at all times to day trade. More on that shortly…

How to Start Day Trading the Right Way

Is day trading easy? Absolutely not … but you also don’t have to be a rocket scientist to be good at it. You just have to start trading the right way.

What do I mean?

First of all, if you’re just starting on your very first trades, don’t use a margin account or trade with leverage.

If I had a dollar for every time I heard about a newbie trader blowing up a margin account with too much leverage … I’d be even richer than I already am.* You can avoid blowing up your account by learning to manage your risk.

One way to get your feet wet without losing your shirt is to try paper trading. It allows you to practice trading without risking real money.

If you think you have what it takes to start day trading the right way, I suggest applying to my Trading Challenge.

Day Trading Taxes

Here’s another question I hear besides “is day trading worth it” — is day trading legal? Yes, as long as you pay your taxes.

Paying taxes as a day trader is a bit more complicated than entering your W-2 into TurboTax. But don’t worry, it’s not that difficult…

As a day trader, you primarily need to account for both capital gains and losses, as well as your total cost basis.

If you make money on a trade, that’s a capital gain, and that money is taxable like any other form of income.

If you lose money on a trade, that’s a capital loss, and this amount could be tax deductible.

Your cost basis is the total amount of money you spent to initially invest in the trade.

If you aren’t a tax expert … that’s fine. Neither am I.

But I do have a licensed financial adviser who helps me understand these things, and you should too. If you have any tax questions, take it up with a local licensed pro.

Day Trading Rules & Risks

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Let’s post the question again: Is day trading worth it? To answer that, you must understand the rules and risks associated with it.

Pattern Day Trader

The day trading rule that everyone talks about is the pattern day trader (PDT) rule.

This is the minimum equity requirement to day trade I mentioned earlier. It states that day traders must have at least $25,000 in their accounts.

One note is that this $25,000 minimum refers to your account’s total net liquidity — it can be made up of both cash and securities.

While getting to $25,000 may sound like a huge obstacle to overcome with a small account, I actually think the PDT rule is a good thing.

It forces newbie traders to focus on five-star setups and ties their hands from overtrading.

Margin Call

For traders with margin accounts, the worst possible situation is receiving a margin call from your broker.

This occurs if you use borrowed money from your broker to trade, then lose that money on the trade.

When this happens, brokers are quick to protect their assets. They’ll reach out to you, asking for further deposits or collateral.

Margin calls are a nightmare for day traders. I’d avoid them whenever possible.

Luckily, they’re pretty easy to steer clear of — manage your position size and never risk more than you can lose.

Don’t trade with borrowed money.

And if you’re already in a margined trade that has gone south, what are you waiting for? Cut your losses and move on … BEFORE you get a margin call.

Day Trading Strategies

Don’t overlook strategies when considering ‘is day trading worth it.’ The best strategies for day trading depend on your trading style. Different game plans and setups work for different people.

But some trading patterns are impossible to ignore. After you have just a small amount of experience, you begin to notice certain technical indicators repeating over and over.

With the right guidance, you can learn to identify these patterns and potentially capitalize on them.

This is why I love to teach. It’s truly incredible what I’ve seen my students accomplish with hard work and discipline.

Again, you don’t need to be a genius to be a successful trader. I’ve made most of my $7.1 million trading garbage penny stocks.*

Trading doesn’t require you to be a prodigy or have a special gift — it just requires you to study and focus on your plan.

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Is Day Trading a Good Idea?

Trading isn’t for everyone. Some people don’t have the risk tolerance to face the prospect of losing money. I trade scared, but if you trade too scared, you won’t trade well.

Others don’t have the discipline and self-control to sell into strength, cut losses quickly, and avoid FOMO.

With that being said, is day trading a good idea?

It depends. I love it. It can be a great way to potentially grow a small account. (Again, with rules and discipline.) That’s why penny stocks are my favorite to trade — they’re cheap and volatile.

The price swings in penny stocks provide traders who know what to look for with predictable patterns and setups again and again.

There are so many resources available to up-and-coming traders these days.

When I first started trading 20+ years ago, I had to figure out everything for myself. It was a completely different ballgame.

Now, you can spend thousands of hours on YouTube learning nearly everything there is to know about day trading.

This is why I started teaching in the first place. I want to be the mentor to my students that I never had.

The software platforms available to modern traders have leveled the playing field in a big way. Back in my early days of trading, it wasn’t like this.

It’s why I helped to create StocksToTrade.** I wasn’t satisfied with the software available for penny stock traders. So I helped design a platform with clean charts, built-in scans, and more.

21st century trading technology has made technical analysis available to so many. You too now have the opportunity to dive into charts and scans with ease.

Is Day Trading Profitable?

For most people, day trading is NOT profitable. Remember, 90% of traders LOSE.

Discipline is what sets the profitable traders apart from the rest of the pack. You also have to be willing to adapt your trading to the current market conditions.

Be nimble. The market constantly evolves — you have to adjust to it. There’s no magic formula or website that will give you all the answers … you have to put in the work.

Is Day Trading Worth It: Frequently Asked Questions

How to Limit Losses When Day Trading

To limit your losses, you need to cut your losing trades QUICKLY. As soon as a position starts to go red or you’re on the backside of a trade, cut the loss and move on. I’d also avoid using leverage when first starting out. Borrowing money and trading it recklessly could cause you to blow up your entire account. Worse, you could end up in debt.

How Much Do Day Traders Make Per Day?

That depends. Is their account worth $10,000, $25,000, or $2 million? Generally, the amount a trader can profit is directly linked to their account size. As your account grows, you can take bigger trades without risking a huge percentage of your total account value. This leads to other questions … Are they risk-takers who pile into certain positions aggressively when they see the right setup? Or are they more conservative, comfortable with booking small gains consistently? Most of the successful traders I know tend to fall in the latter category. Singles add up. The bottom line: The amount day traders can make per day depends largely on their risk tolerance and overall account value.

Is Day Trading Easy?

No, day trading isn’t easy. If someone tells you it is, run. Day trading takes discipline to put in the hours of studying required to learn and grit to follow the trading rules necessary to succeed. Trading is challenging, but to me, that’s what makes it so fun and rewarding. I’ve been doing this for 20+ years and the market can still humble me. If day trading were easy, everyone would do it.

Is Day Trading Harder Than Passive Investing?

I think day trading is definitely harder than passive investing. Day trading is a specialized skill that takes a lot of hard work to sharpen and refine. Passive investing, on the other hand, requires little more than dropping money into an index fund each month. This is why a lot of people opt for passive investing. They don’t have the time or passion to take on trading. But if you’re reading this, you’re at least interested in the idea of trading. That alone tells me you could have a passion for it. Study hard, work hard, and the results might surprise you.

The Bottom Line: Is Day Trading Worth It?

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The big question today: Is day trading worth it? If you’ve made it this far, you can probably tell that I think it is.

No, it’s not easy. It’s challenging. And it takes hard work and A LOT of studying to succeed.

That’s why I teach the way I do. I don’t teach my students to find the best companies or invest long term.

Instead, I teach traders to expect the worst out of every company. Prepare for anything to happen in a trade.

Success won’t happen overnight, either. You need experience and countless hours of studying.

That’s probably not what you want to hear … but it’s reality.

Most penny stock companies fail. And most traders in this niche fail with them.

But I’ve survived in the stock market for 20+ years by following the same repeatable patterns and consistently hitting singles. Again, singles add up.

You will occasionally take losses. It’s OK. I still take losses, but I don’t let them get to me. Instead, I cut my losing trades QUICKLY and move on. Your gains should outweigh your losses.

Find trading patterns that work for you. And if they stop working, be flexible. Open your mind to new patterns.

I LOVE trading. It allows me to work from anywhere in the world, explore my love of travel, and give back to charities in need.*

But it takes a tremendous amount of hard work and discipline to be successful as a trader.

Ultimately, only you can decide if trading is worth it for you.

What do you think? Is day trading worth it? Let me know in the comments — I love hearing from my readers!

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*While Tim Sykes has enjoyed remarkable success trading stocks over the years, his primary income derives from the sale of financial education products and subscription services offered by various businesses and websites in which he has an ownership stake.

This level of successful trading is not typical and does not reflect the experience of the majority of individuals using the services and products offered on this website.  From January 1, 2020, to December 31, 2020, typical users of the products and services offered by this website reported earning, on average, an estimated $49.91 in profit. This figure is taken from tracking user accounts on Profit.ly, a trading community platform. 

**Tim Sykes has a minority ownership stake in StockstoTrade.com.


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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”