Is Day Trading Profitable

Is Day trading profitable? How Does Day Trading Work?

Written by

Table of Contents

Do you know what day trading is and how it works? Is day trading profitable? We mostly listen to day trading from our friends who work in the trading industry. Day trading must be appealing for a lot of reasons. This article discusses the various day trading strategies and how traders can make money through day trading. 

Must note that losing money at day trading is simple. Day trading consists of substantial brokerage fees, so you must pick the best broker who offers a good range of tools and create a manageable trading plan consisting of proper risk management. This article also proved helpful for beginners who are going to participate in day trading.

What do day traders do to make money by Day trading? 

Do you know How Day traders make money through day trading? They mostly aim for futures, stocks, options, commodities, and currencies. Day traders hold positions for minutes and hours, before selling. Day traders perform their trade in a day itself. They enter and exit the market on the same day. Day traders may also use leverages for high returns, but note that leverage can also lead to significant losses if you do not properly handle it. 

If you want to survive as a day trader, you need to take some measures such as setting profit taking points and stop-loss orders, never take too many risks which you can’t afford. According to professional traders, never take risks of more than 1% on your portfolio on a specific trade. For example, suppose your portfolio is worth $10,000, then you can take risks of $100 only. If you take risks of more than 1%, you lose your whole invested money in case of loss. 

Day traders can manage this risk through stop-loss and profit-taking indicators. Set the limit of losses at 1% and set your profit taking at 1.5%, but you need to pay more attention at the time of applying these indicators. If you are a beginner in the finance market or looking to start day trading, collect complete details about day trading from the article below.

What is Day Trading?

Buying and selling stocks within a day is known as Day-Trading. In day trading, traders enter and exit the market in a minute or hours with the target of generating fewer profits. For example, day traders buy stocks in the morning and sell them at noon on the same day. In simple words, day trading should take place in a day only. It never extends to the next day. 

Online stocks broker and do it yourself investing applications make this process simple for everyone. You just need a smartphone and an internet connection to enter the day trading. But you must note that straightforward thinking is not always good. It is easy, so It does not mean it is smart. Must select your broker based on your requirements, not on the basis of popularity and other factors.

Day trading consists of high risks. It is not everyone’s cup of tea. You require a lot of experience to handle the market trend in a day. The market is more active in the day compared to the night market. That is why day trading consists of many risks. 

How Does Day Trading Work?

If you are interested in day trading. Here we explain to you how day trading works? These steps will clear your dough about the day trading process and how can you do that? These five steps will help you learn how to start day trading with the stock market example.  

Study the market

Before investing in the stock market, you need to understand what you are doing. Basic knowledge about the stock market is not enough for day trading. You need to study how to handle market trends, how multiple industries work, how global events affect market volatility, how to trade performance and others. Most day traders focus on a specific industry; they never trade in multiple markets in a single time. 

Create an effective strategy

Develop an effective day trading strategy for performing trade at daytime. Here we explain the top 10-day trading strategies. There are various courses and online articles available through which you can easily learn how to trade. A wide variety of trading strategies material is available online, some of them consist of traditional trading while others will consist of trending styles of trading. You can also learn from videos which consist of tracks of live trades, study stocks charts, and stocks analysis. Must determine how many risks you can handle before selling stocks. 

Set a demo account

Before starting trading on a live account and risking your actual money, you must create a demo account on your broker’s platform. Most of the online brokers offer demo accounts such as Equiity, TradeEU. At a demo account, you can quickly learn about the market trends and handle the risk and fluctuations. In addition, through a demo account, you can perfect your trading skills and strategy making point of view.

Set a limit and aim for your target

It takes time to learn how day trading works. Generally in the case when you start trading with real funds. Trading takes place during usual business hours. Missing Sell of stock at the right time before market close will lead you towards extreme losses, in case the stocks price fluctuates overnight. Must try to complete your trades on the same day for generating contact profit. 

Commission-free trading is another option to purchase or sell stocks and ETFs. In this case, you do not need to pay any trading fee to your broker. However, that would result in long term trading. 

If you are a beginner, you must set your limit on the funds because, as a beginner, your chances of losses are increased. So you must invest only that portion of your income which you can afford to lose. 

Never forget to check tax implications

Must take advice from your financial advisor, tax specialist, and accountant on how day trading returns are treated at the time of filing tax. Must select a broker carefully because your broker will manage your trading account, and also, you are executing a trade on its platform, and while we talk about timing, it matters a lot. Broker reputation and expertise are also essential factors. 

Top 10 Day trading Strategy for beginners

Your knowledge is your strength

Rather than basic knowledge, day traders need to get updates with the latest events and market news that affect the market, such as the economic outlook and the Fed’s interest rate plans. 

So never forget to do your research work. Create a list of specific stocks which you did like to trade and keep yourself updated about the top firm and general market behaviour. Visit a financial related website and read business-related news.

Set dedicated time for trading too.

Day trading needs your time. This is because it is called day trading. You need to spend most of your time on stock tracking during day trading. There is no limit of time you can give this process. So if you do not have sufficient time for trading, do not jump into this. 

I know you are thinking, why do we need to spend this much time on day trading. The answer is simple: you need to spend time tracking the market and spot the right opportunity, which can happen anytime during the day. Must take action quickly when they spot the opportunity.

Set Apart funds

Must set a limit on how much funds you can invest on specific trades. As I told you before, experts only allow risking 1% to 2% of the amount available in your trading account on each trade. For example, your trading account consists of $40,000, and you are ready to risk 1% of that amount, so if your trade goes wrong. You will lose only $400 only. Must keep your trading money apart from your savings. This money which you keep for trading can generate either profit or loss. 

Try to ignore penny stocks. 

I am not telling you that you may not search low price stocks or deals, but try to stay away from penny stocks as a beginner. Because these stocks are always illiquid, and it consists of both chances of profits and losses. So be careful while buying penny stocks

Start with a small amount.

Beginners must consider one or two stocks during a particular trade. Finding and tracking opportunities is easy with some stocks. In the current era, trading of fractional shares is very common, so you must restrict your investment amount to specific levels.

For instance, if you want to buy Apple shares worth $250 and you only want to invest $50, most of the brokers allow you to buy one-fifth of a share.

Time Those Trades

Most professional investors and traders place orders as soon as the market opens in the morning, which provides you with reasonable price volatility. Seasonal traders are very smart to solve patterns and select suitable stocks for generating good profits. But what about beginners, how they will recognise which deal is best for them. It is better for beginners to go through the market in the morning hours up to 1 to 2 hours, then make decisions based on current market behaviour. 

Noon timing is often less volatile than rush timing because beginners aren’t able to handle the fluctuation of price during rush hours. These hours are not safe for them.

Reduce losses with limit orders 

Make your entry and exit decision wisely by keeping all the risk factors in your mind. Decide with which order you will enter in the market. Must execute that order at best deals present during that time. But it may not consist of any price guarantee. 

Restrict orders meantime, provide price guarantees but not give the execution. The restriction will help to trade more efficiently, where you can set your own prices for selling and purchasing. Experience and professional traders use options strategies for hedging their portion. 

Perform according to your plan

The quality of successful investors is that they perform trading moves quickly, but they never think quickly. They keep an eye on trade, and they efficiently make decisions of buying and selling and then make trading moves rapidly. Must follow your strategies and never get emotionally involved in your trade. As we all know, day trading is not an easy part of trading. So moving the market according to your strategy is the best policy for trading.

Be Realistic About Profits 

Applying strategies does not mean you always generate profits only; sometimes, you may also face losses. Most of the investors only gained some amount of their trade. Although they make money on their profits, they also lose money on their wrong decisions also. But the ratio of losses is more compared to profits, not in everyone’s case. It depends on how to perform your trade. Be sure about your invested fund limit because that money can generate profit as well as it may also move towards loss. 

Stay Calm

The stock market tests your patience level a lot of the time because it is the nature of the stock market. We can judge by which news it will get affected and change its trends. As a day trader, you need to stay calm in these situations. Beginners get easily attracted by a quick rise of market prices, but this type of rising is only to attract traders. They are not stable. But beginners can’t understand this, and they act quickly without thinking about any risk. So you must make your decision on the basis of logic, not emotions. 

Is day trading profitable? 

In simple words, Day trading is not a good idea until you are not aware of market fluctuations and trends. Day trading is mainly used for performing short term trades because of its volatile nature. Day trading investors perform the trade during day hours only. They buy stocks in the morning hours and sell them on the same day before market closing. If the price of stocks rises, the day trader will gain profit, whereas if the price drops during the day, they have to bear losses.

Another thing that stops people from doing day trading is transaction costs. The two highlighted transactions are fees and taxes. Most online brokers do not charge commission fees from their clients. Try to give preference to commission-free brokers. 


Is day trading profitable? Can you start intraday trading? Day trading is not an easy task. It requires more attention and time compared to other trading styles. But it is the best source of generating profit in short term investment due to its volatile nature. In this article, we provided you with a complete overview of day trading. And here, we also discussed 10 strategies of day trading. 

Top Broker Reviews