Thinking about trying your hand at day-trading? Investing experts share everything you need to know before diving in.
.August 30, 2025
Amanda Perobelli/ Reuters
More and more aspiring investors are being drawn into the world of day trading.
While the prospect of making money with a few swift moves is appealing, there’s a lot of downside risk.
Despite the success stories that flood social media, experts caution against jumping in too quickly.
For anyone scrolling through r/WallStreetBets or other popular online investing forums, it’s easy to come across users sharing screenshots of surging portfolios. Many of the trades feature same-day gains.
These successes are often the result of day trading, the high stakes art of buying and selling securities within the same trading period, typically within a few hours of each other, if not less.
Many retail investors have been drawn to this world. New research from the JPMorganChase Institute shows that the share of 25-year-olds using active investing accounts had increased sixfold from a decade prior.
One major force behind that is Gen Z investor FOMO, which is driven by a seemingly endless flood of social media posts from seemingly regular people posting their trading successes.
But before you blindly follow the herd and embark upon an attempt to day-trade, it’s helpful to proceed with caution and make sure you fully understand the nuances. That means taking the time to truly become familiar with the many forces that drive the market and understand the risk that comes with it.
While discussing the risks posed by day trading, many experts stress the importance of not underestimating market volatility. That means taking the time to properly understand the forces that drive it before making any trades.
“Beginners should use objective measures like the Average True Range (ATR) and implied volatility to gauge volatility,” advises Alex King, day trader and founder of financial education platform Generation Money.
He continued: “From a practical point of view, beginners should set strict loss limits per trade and per day or themselves and be prepared to reduce position size or step aside if stops need widening.”
King added that it is also important for new traders to be able to recognize when to step away and avoid trading altogether, sometimes a necessary component of any day trading strategy.
Tracy Shuchart, senior economist at TradeNinja, recommends that new day traders begin slowly by using virtual money before risking actual capital.
“Starting with a demo account is a smart way to test your skills and emotional resilience before committing real funds,” she notes.
Anthony Denier, CEO of Webull, says that new day traders should utilize a platform that offers tools and resources to enable them to learn and grow, particularly in the early stages of trading.
“Charting tools, real-time market data, and research reports help investors make informed decisions,” he added.
Experts agree that one of the most important elements of day trading is risk tolerance. Specifically, how much risk a trader can tolerate while keeping the level head necessary to make calculated decisions.
Denier notes that new traders will need to know their level of comfortability with incurring short-term losses while chasing long-term gains.
“A practical step is to start small with investing amounts, while using paper trading to test strategies in real-time without putting capital at risk,” he stated, advising investors to implement a long-term investing strategy that can smooth out volatility.
According to Michael Katz, CEO of limited risk trading platform Trade the Pool, new day traders should begin by working with an online prop firm prior to committing their own savings too early, a common mistake that he sees.
“Assess your risk tolerance,” he advises. “Your relationship with money influences how you manage trades.”
While the quick profit allure of day trading may be tempting, experts advise new traders to avoid this mindset. According to Denier, it should never be viewed as a get-rich-quick scheme.
“Chasing “hot” stocks or reacting emotionally to headlines often leads to buying high and selling low,” he states, stressing the importance of emotional discipline for traders.
To avoid being caught up in media or trading frenzies, the CEO recommends that investors begin with a clear plan of action, in which they define exit and entry points, as well as portfolio allocation and maximum risk per trade.
King adds that he often sees investors risking too much money on single trades, particularly risky ones. “Beginners should aim to limit each individual trade to no more than 1% of their account, certainly no more than 5%,” he cautions.
In addition, King highlights the importance of stop loss, an order to automatically sell a security if it falls below a certain price.
Suchart recommends a similar strategy as a means of guarding against losses as a new trader.
“A robust risk management plan should outline position sizing, stop-loss and take-profit levels, and diversification strategies to avoid overexposure in one market,” she states, also highlighting the importance of establishing a clear plan prior to trading.
