Day trading involves opening and closing all positions within a single day to take advantage of short-term price fluctuations. It requires a minimum of 2 hours of attention per day as well as dedicated research and strategy development. In contrast, long-term investing does not demand as much daily time commitment but still requires periodic research and discipline to follow a plan. Potential returns are much higher for day trading but also carry more risk since losses can compound quickly if positions turn against the trader. Overall, day trading is more suitable for those with skills and personality for intense short-term attention to markets while long-term investing allows for more flexibility and longevity.

1. Pros and Cons of Day Trading
Versus Long-Term Investing
Trading VS Investing
Introduction
Both Day trading and investing are feasible trading options, and as a matter of fact, the
majority of traders exercise their option of doing both. Day trading typically lasts for a few
seconds or minutes and within that very short time indeed the price of an asset fluctuates and
a trader has to make a split-second decision to take advantage of asset price fluctuations in
the short-term.
All positions in day trading open and close on the very same day. Investments, unlike day
trading, aren’t made for the short-term; rather they are made typically for the long-term for a
protracted period lasting for months or even years. The process of decision-making in relation
to day trade as opposed to investment may not be similar for the most part.
Whether one intends to be a day trader or an investor depends to a large extent on the
personality and skills of an individual which may vary from individual to individual. Any
fund manager or financial planner would recommend investing in day trading as it’s a
relatively passive income leading to generating wealth.
However, the uninitiated may be in a quandary deciding whether to focus their efforts on
investing or trading and therefore guidance from experts every step of the way is essential.
It’s essentially a learning process in regards the difference between investing and day trading.
Capital requirements, time commitments, skills, psychology, and ROI are all variable factors
and indeed unique to individual situations.
Capital Requirements
In the US for example, in relation to day trading stocks, it’s mandatory for a day trader to
maintain a minimum balance of $25,000. There isn’t any legally mandated minimum balance
requirement for day trader trading the currency markets though, but maintaining a nominal
balance of at least $1,000 is advisable. Similarly, day trading futures requires a minimum
account balance ranging between $5,000 and $7,500.

2. Investors typically invest in stock markets which are long-term investments in Futures with
an expiration date and therefore Futures aren’t recommended for long-term trading. Using
currencies for long-term trading is an option but the downside is that there are a handful of
stable currencies that render a viable investment option. In contrast, there are far too many
stocks and ETFs that a trader can opt for which can be used for trading futures and currencies
indirectly.
The starting capital requirements of an investor would vary based on the type of investment
the investor may opt for. If for example, someone intends to own a minimum of three stocks
or ETFs then, in that case, there isn’t a prescribed minimum investment amount. However,
when investments are relatively small, one ought to be mindful of the amount to be paid in
commissions. Even though
the percentage of commission to be paid remains unaltered in comparison with the
investment amount, what matters is the fee or commission which tends to be exorbitant on
smaller investments. Furthermore, there is a commission to be paid while selling as well.
Therefore it's recommended that amount of investment be fairly large assuming that one
purchases one’s own stock.
Monthly investments into an employer’s contribution plan are essentially invested in mutual
funds without any fee right away, rather, there are the nominal yearly fees levied and at the
time of withdrawal of funds, additional fees have to be paid too.
Time Commitments
As far as committing time, a Day trader ought to dedicate a bare minimum of two hours
towards day trading. Within the first hour of the U.S. markets opening officially for trading is
ideally the peak time for capitalizing on huge price movements and traders get time to
prepare. With lunchtime approaching stocks typically aren’t as active as they were during the
first hour or two. Day traders ought to review their trade on a daily and weekly basis.
As markets are active and open, day trading is most lucrative for stocks, currencies, and
futures. Moreover, global markets are more than likely to be active as they open; currencies
and European stocks in particular. For U.S. or Canadian residents, the ideal times for trading
are early morning or late at night. I these aren’t viable options for anyone then perhaps day
trading isn’t one’s cup of tea as so to speak and one should consider investing.
Prior to actually making an investment, researching investment options are essential to
evaluate the pros and the cons. There isn’t any particular time for conducting research and
therefore research can be done at leisure regardless of a stressful work schedule. As and when
funds are available for investment, dedicating only a few hours every month is all it takes to
peruse and identify stocks that fulfill the criteria of one’s investment strategy which may be
time-consuming initially.
Those intending to invest large amounts and are seeking several trading opportunities may
have to devote a few hours every week researching alternatives. Conversely, other types of
investors may not be dedicating a lot of time on research, instead, they might want to review
their investments every couple of months, probably as and when they are ready for yet
another investment.

3. Skills and Personality Requirements
In any type of trading, one ought to seriously commit to a time for research and creating a
viable strategy which one has to learn to implement effectively. New traders often go off on a
tangent from their original plan as they realize that they may have to deploy funds that they
may be emotionally attached to.
Day Trading and investing alike requires discipline as buying and selling ought to be done by
responding to in-built triggers of the plan. Trading regardless of the absence of a trade trigger
is undisciplined and could very well lead to the investment performing poorly.
Patience is as much an essential attribute in Day trading as it is in investing but there are
nuances of a day trader’s and an investor’s patience. Day traders actively trade throughout the
day and yet they have to wait for the right moment triggering a buy or a sell. Observing every
little fluctuation in price can be tempting for a day trader to make a trade when in fact it may
have been a wrong signal. Investors too, ought to patiently wait for the right trade trigger.
Unlike day traders, investors aren’t keeping an eye on the status of their investments all the
time and therefore they aren’t as tempted to trade as day traders are. That said, investors
nonetheless ought to learn to trade by observing charts and being alert for a valid trade trigger
that may possibly lead to better opportunities.
Potential Returns
Potential returns from day trading and investing aren’t comparable in any way, shape or form.
There isn’t any cap on investment and performance of the funds would be unaffected. Day
traders, however, would probably witness the diminished performance in percentage terms even
with accounts worth several hundreds of thousands of dollars as deploying large amounts is
harder on trades that last a few seconds or minutes.
As investments are profitable daily they earn daily compound interest which means interest
income more than quadruples in addition to the deposited principal amount. As a result, an
account could inflate rather quickly. The downside is that the account of a day trader could
plummet gradually if, for example, a day trader loses even 1 or 2 percent of their principal
amount each day.
Individual investors, for the most part, are relatively better off as accumulation of capital isn’t an
issue for them as there are plenty of stocks available to opt for and a much longer period for
accumulation and disposal of held stocks.
As investments are usually held for the longer term, the compounding is relatively slower. If
investments are on-going for many years until the end of the term then profits would be realized.
However, the profits or gains can’t be re-invested for further ROI. The advantage or benefit of
shorter-term trading is that there is rapid compounding.