It might not exactly fit the profile or definition of a get-rich-quick strategy, but day trading comes with a ton of significant perks. If you’re keen enough, well-informed, disciplined, and armed with the right tools, you could make a fortune as a day trader.
And besides the excitement it brings, you also have control over your trades, not to mention the convenience of doing it from anywhere you, please. But even then, it can be extremely difficult to make consistent wins as a day trader, meaning that losses should also be expected from time to time even with the right strategies in place.
Read on as we explore some common reasons it’s incredibly hard to win consistently as a day trader, which will hopefully inspire you to make wiser trading choices.
4 Common Reasons Consistent Wins Are Hard To Come By For Day Traders
1. Intense Competition in the Trading Arena
Winning consistently as a day trader oftentimes comes down to outsmarting the stiff and increasingly growing competition in the trading arena. If there's one thing that technology has done, thankfully, it's to level the playing field and make trading more accessible than ever before for those who want to grow their money.
This is particularly seen with platforms like SoFi’s online stock trading, which makes it easier for everyone to get involved in investing and day trading. With so many others looking to make a quick profit, it’s the day traders who implement savvy strategies and excel at risk management that end up staying ahead of the competition.
2. Market Volatility, Sometimes from Unforeseen Events
Day traders face a tremendous amount of market volatility on any given day. To come out ahead, you may not only need to analyze the current trends and continue but also be prepared for changes or sudden shifts. This is more so if you’re day trading in crypto, whose prices are generally more volatile than stocks and regulated currencies.
Often caused by unforeseen events, (political, economic, or social), unexpected changes are bound to happen at some point in the world of trade. And depending on the source and the cause, the said changes could result in quick profits or devastating losses.
To make sure these swings don't catch you off guard, it pays to stay informed on global trends, external news, political tensions, economic indicators, and other factors that could affect the price movements of the market you’re interested in.
3. Time Limitations Are an Obvious Challenge
Day trading also involves a great deal of time for analysis and decision-making, making it difficult to win consistently when juggling competing priorities in life. Researching markets and preparing trades takes up an enormous amount of energy and concentration, most often without any guarantee of success.
Traders need to remain vigilant and respond quickly to market changes during active hours. But the 24-hour nature of many markets means that they should also account for time away from the market for rest and relaxation.
As such, it's not uncommon for day traders to struggle with finding the balance between trading and other commitments, which could lead to losses rather than wins at times. It’s no wonder why some critics of day trading advise against it in the first place!
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4. Indiscipline and Emotional Decision Making
Finally, emotion is often a trader's worst enemy, especially for day traders whose decisions must be made quickly during volatile markets. While emotional decision-making can lead to costly mistakes at any time, this risk is particularly high in the incredibly time-sensitive world of day trading.
Getting caught up in emotions like excitement or fear, for instance, can cause you to forget your original strategy. You could buy stocks impulsively, or sell without analyzing the current market situation.
This is why it's so important to remain disciplined and focused on your end goal at all times, as this will help you make more informed decisions while trading.
In conclusion, consistent wins are hard to come by for day traders, and for a few good reasons. Knowing these reasons can be a plus to your trading strategy, and help you make more from your buck in the short or long term!
