Why Is Day Trading So Hard? Understanding the Challenges and Realities

Day trading is so hard because it requires personal mastery of your emotions, an uncommon amount of discipline, and deep knowledge of how markets move. It is not something that can be learned in a day, week, month or in some cases even in a year. Day trading is one of the hardest things anyone can do to earn an income.

Think about traditionally prestigious careers: doctors, lawyers, CEOs, they all undergo a rigorous schooling process that ensures they are fit for the job. Oftentimes this is a multi year process. Most people who want to become day traders think they can bypass this learning phase and jump right into a lucrative career. The misalignment of expectations with the reality of trading is one of the reasons it can be so difficult.

Discipline Challenges

The primary reason day trading is so difficult is because it is emotionally demanding. As a trader you’ll face the stress of making mistakes that can result in potentially life changing financial loss. Emotions such as fear and greed will cloud your judgment and lead to impulsive decision-making.

If you’re losing on a trade, you may be inclined to add to the position to average down in the hopes of a break even exit. You not only get more capital involved in the trade, but are likely fighting a thesis that is wrong in the first place. In the opposite direction, you may be too quick to realize profits because you are scared they won’t last. This can massively skew your risk to reward ratio, impacting your long term profitability.

To avoid these common pitfalls you must maintain a disciplined lifestyle in and out of the markets. Trading requires emotional control and sticking to a well-defined trading plan. It takes time and practice to develop the necessary psychological resilience, and practicing outside of the market can only help. Make the bed every morning, wash the dishes after a meal, maintain healthy habits. While those tasks won’t make you a better trader directly, they will improve your self discipline.

As traders we must do the right thing for every situation with the information in hand, even if it’s an uncomfortable thing to do.

The Problem With Ego

Directly related to the last comment is putting your ego aside and being able to admit that you were wrong. Traders are in the business of making money, not being right about every call in the market.

When you take a loss on a trade, you are basically admitting that your trade thesis was wrong. That admission can be so painful for some people that they would rather stay in a trade that results in financial loss. Beyond that, as we mentioned earlier, they may even be inclined to add to their trade, doubling down on the idea that they were right all along.

Successful traders are able to detach from this emotion and start from scratch each day. If you look in the mirror and are torn apart by a loss, you’ll likely carry that into subsequent sessions, impacting your ability to see the market clearly. Trigger the downward spiral.

Just remember this: You can be wrong and profitable, or you can be wrong and blow up your account. The choice is yours.

The Competition

In the world of trading, it’s everyone for themselves. You are trading against all of the most experienced traders in the world, hedge funds, high frequency trading algorithms, quant traders, you name it. There are no free handouts when it comes to making money in the market.

As a new trader, you should embrace this information because it means you have the capacity to climb the ranks and build experience over time. After getting a year under your belt, you should know how to avoid the same mistakes you made on your first day trading the market. Your goal is not to despise the competition, but rather strive to understand how they operate and align your strategy to avoid being taken advantage of.

The Learning Curve

Day trading success is not an overnight process. If you’re truly going to level up to your competitions competency and become a serious player on the field expect it to take a while. Beginners may think that day trading is hard, when in reality, they have spent very little time learning the ins and outs of market movement.

Anything that you are just beginning is going to seem hard. If you allowed someone with a high school degree to perform open heart surgery they would have no idea what they are doing and call it “hard.” The same principle applies to markets. It’s easy to open a day trading account with zero experience or education and get beat up by the market and write it off as “too hard.”

If you spend the first portion of your trading career learning how markets move, and why markets move, you’ll be far better prepared to build a first strategy. Let’s be clear that spending time learning first won’t guarantee you’ll instantly be profitable, and trading will still be hard, but for the right reasons. Not because you don’t know what’s going on around you.

Don’t Chase The Shiny Object

Once you’ve committed to being a day trader, and accepted that you’ll need to put your ego aside, and have taken the steps to learn a first strategy, stay focused. There is always going to be someone talking about how they made a million dollars trading a different strategy, or trading a different market. Your aim is to find what works best for you and your psychological composure.

Don’t change your strategy if you haven’t fully tested it, understood its drawbacks, and made improvements based on thoughtful consideration. If something is clearly illogical, or just outright not profitable, of course you can move onto the next thing, but being a “tinkerer” is only going to make your trading journey harder, not easier. If you are always tweaking the strategy, you’ll have a lack of consistency and ability to identify the single variable causing the losses.

Conclusion

Day trading is undoubtedly one of the most difficult careers to pursue. It demands a complete understanding of your personal psychology, an experienced skillset, and the resiliency to remain emotionally detached from the outcome of any one trade. Trading is an emotional roller coaster, your ego will get in the way, and it’s not something you can master overnight. However, with the right approach,  reasonable expectations and a well-defined trading plan, it is possible to achieve success in the world of day trading.

Remember, it takes time and experience to become a proficient day trader. Patience, perseverance, and a commitment to continuous improvement are key to overcoming the inherent difficulties and increasing the odds of long-term profitability.