* The hardest part about day trading is the emotional battle, traders told BI about their professions.
* Those trying to turn a profit in markets said they often struggled with the toll of volatile trading days.
* They found measures such as seeing a psychologist and journaling to be helpful.
Day trading isn’t so much a science as it is an emotional test.
That’s the secret to day trading that outsiders don’t seem to understand, retail traders told me at a recent happy hour in New York’s Financial District.
That might come as a surprise to those who aren’t familiar with — no pun intended — the trade. Envision the day trader persona and what comes to mind for many people is probably a freewheeling, sports car-driving finance bro, but people trying to make their living in the markets frequently describe their work as a Sisphyean struggle, one that constantly tests a trader’s ability to deal with failure, conquer panic, and act “normal” in front of friends and family on big down days.
That distress is evident in the bird’s-eye data, which tells a story of how common failure is among day traders. One 2020 study found that nearly all traders who persisted for more than 300 days ended up losing money, after accounting for fees. Just 1% were able to clear the bar for making minimum wage.
Over 35% of traders said they believed their biggest challenge when trading was managing emotions or dealing with losses, according to a survey conducted by Quantified Strategies this year. (Dealing with losses was the top emotional challenge traders dealt with, according to a separate question in the survey.)
Another 2022 study found that around 23% of traders were found to have moderate, severe, or extremely severe stress levels.
Add to that a mortgage, bills to pay, and a family to support, and it isn’t hard to see why some traders feel seriously pressured on wild market days, according to Kevin Law, a 44-year-old trader.
Law, who mentors other traders with the platform BullMentor, says he doesn’t get too worked up on down days in the market, partly because he keeps the stakes low and reminds himself that he has a day job to fall back on. But traders he coaches sometimes inundate him with panicked texts asking what to do on volatile trading days, he said.
“It’s always emotions,” he said of the hardest part of being a trader.
Lin advises traders to develop a trading system with parameters and to stick to their trading strategies.
That can be easier said than done.
Ricardo Saldana, a 29-year-old trader, said his toughest emotional challenge was when he was trying to pass his first verification for a prop firm. He was so excited by the prospect of having access to fresh capital that he began to overtrade, a phenomenon where a trader places too many trades and frequently comes away with a loss.
