As a day trader/online trader, there are many common challenges faced on a daily basis. Unfortunately, from the outside looking in, many people fail to appreciate the work which goes into relatively short-term trading. We will now take a look at the daily challenges of a day trader and how they are able to cope and remain focused at the same time.


Market volatility


Online trading has increased dramatically due to recent volatility brought on by Covid and various financial challenges. While day traders see market volatility as an opportunity, they must retain their focus to make snapdecisions and execute trades as quickly as possible. This is more challenging than you might think!


Information overload


We know that information is power but an information overload can be challenging to manage. As a day trader, you must consider economic indicators, company announcements, sector news, and anything that may move prices and investor sentiment. Managing the volume of information on any given day is crucial, in effect separating the wheat from the chaff.


Risk management


Risk management is a critical element of your everyday activity as an online trader. In effect, you are looking to minimise your downside while maximising the upside, which is often easier said than done. However, using stop-loss limits and managing position sizes are two relatively simple means of protecting your capital.


Emotional discipline


Whether new to the investment markets or a long-in-the-tooth experienced investor, everybody gets emotional about money and investment. However, how you control your emotions, emotional discipline, will ultimately dictate your success as a day trader. Fear, greed and impatience are all natural emotions, many of which can be used to maximise your investment returns, but you must always remain in control.


Technology issues


The technology side of online trading is an area where a day trader has limited, if any, real control. For example, if the online dealing system you use was to crash or go slow, you might be left hanging and overly exposed to market movements. Consequently, most day traders will have an alternative to their preferred online trading system, a telephone service. While not ideal, this can be critical in controlling exposure to markets.


Time management


Online trading requires you to focus entirely on your current positions. Consequently, it is essential to manage your day regarding catching up with market news and conducting research, all the while avoiding distractions that can impact trading. While you must be flexible, it is crucial to have a system in your mind, a time and place for specific actions. During online trading hours, you need to be fully focused.


Compliance and regulations


As a day trader, you must adhere to various regulations and compliance issues. For example, there are margin requirements to reporting obligations, and more in between, with laws often tweaked and new guidance issued. In fast-moving markets, margin requirements are increased, which can impact the options of a day trader.


Psychological impact


The constant battle with moving markets, financial stressesand strains, not to mention anxiety and burnout, can all significantly impact the psyche of an online trader. While online trading is often advertised as "easy money", once you begin day trading, you will realise the reality and the challenges ahead. Emotional discipline and mental resilience are critical elements of any day trader’s personality, and rest assured, they will be tested to the max!




When you begin to dissect the challenges facing a day trader, you start to appreciate this is not "easy money". Online trading may be advertised as fast and furious, which it often is, but there's much more to think of behind the scenes. As we touched on above, of all the different characteristics of a day trader, emotional discipline and mental resilience are crucial.

Back to News