I’ve been getting one question in particular pretty often: Can day trading be profitable, if it is done on the side (of another job)? Here is a quick Q&A to day-trading, and how you can make money off of it.

What is Day Trading?

The art of buying and selling a security within one trading day. 

What Can be Day Traded?

It can be done on any investment types.  But it is more popular in the stocks and forex markets.

Can Day Trading be Done at Night?

If you are trading stocks, no. If you are trading forex, as long as you are not keeping your positions open over the next trading session, you’d technically still be day trading. You can call it night trading if you like.

Is Day Trading Illegal or Unethical?

No. But it is highly risky.

How Do Day Traders Compound the Risk?

Often times, by using leverage or buying on margin to increase their potential profits. However as we have discussed over and over again, margin trading also increases the risk of large losses.

Who Can Profit from Day Trading?

Those who are well-educated, well-funded and have the discipline and the patience to stick to their screen all day long. They also must deal with sudden-market-movement nightmares at night.

Why is Day Trading Becoming so Popular?

Because of the Internet. There is a ton of information accessible to anyone. Also online trading is becoming more and more accessible. You can literally trade on your phone while you are sitting on the toilet.

Can Day Trading Be Difficult?

Yes. It’s a very difficult task. It is also very stressful. And it must be done as a full-time job.

Why Do I hear Day Trading is Easy?

Because brokers want you to trade more. The more you trade, the more they make on commission fees. So they make ads to make it look easy.

How Can Day Trading become Profitable?

Above 70% of day traders incur major financial losses when they start trading. To become profitable, they not only must break even on brokerage commissions but also on taxes. So they need to earn sizable trading profit to combat both.