If you’re considering day trading as your side hustle, you are not alone since it’s quite popular. But is there something else you could be doing to earn more money while at the same time reducing your risks significantly?

Three biggest things I noticed people don’t consider when going on a path of day trading are:

The point of this article is not to convince you that you should not be day trading. The point is to decide for yourself after you’re aware of all the trade-offs.

Time Aspect Of Day Trading

If you don’t want to go straight into losing money then you’ll need to spend some time practicing your skills. Ultimately, you want to see if you’re capable of identifying and using the market conditions to your advantage.

And you don’t want to practice your skill with real money. Because by the time you actually become skillful, you might be out of your hard earned cash.

This period should take at least 3 months. But realistically, you need to be doing this for a full year non-stop to get any kind of confidence in your skill.

Once you start trading, it still takes you a lot of time to plan out and execute trades. You need to be watching the market all the time to detect market changes early.

So there’s no point in this career/hustle when this becomes easy or less time consuming. You have to be all-in, fighting the best you can, because that is how other market players are going against you.

And as soon as you drop your guard, you’ll be crushed (mentally and financially).

Risk Aspect Of Day Trading

However, let’s say you’re really motivated to do this and you’re willing to dedicate yourself to day trading. All day long, for years.

Even with all of that, due to very computerized and algorithmic world we live today, the market can go (massively) against you at (literally) any second.

Yes, there are some prevention methods. But if you slip even once. After years of hard work and dedication. You can be wiped out completely or in part. Either way, you’re one bad trade away from erasing years of good track record.

Side Hustle Risk

Let’s not forget, you’re doing this as a side hustle. Which means you have your main hustle (either a job or whatever).

This means you cannot be fully dedicated to your day trading as you should be. And this just increases your chances of making a mistake.

On top of that, you’re not as good at your main hustle, because day trading requires a lot of mental energy. So you’re not performing as well and probably not earning as much as you could from your job.

Now there’s an added pressure on your side hustle because it has to cover the loss (i.e. opportunity cost) from your main hustle. To achieve that you need to trade even more aggressively.

And this causes the risk to rise even higher. So your risk is now slowly spiraling out of control. (or you’re losing money, i.e. you need to pay to work on this side hustle instead of not working anything for free)

Alternatives To Day Trading

People rarely have a deep understanding of alternatives. But fundamentally, whatever you do – you’re not doing a million of other things.

For example, if you day trade you’re not doing plethora of other things that might have both lower risk and higher profitability.

Current Job vs. Day Trading

Let’s say we compare your plain old boring regular job to your fancy day trading side hustle. And also, let’s assume you’re average at your job and you’re an excellent day trader.

Stock market average yearly return is about 9%, and the best investors in the world have about 20% return. So for the purposes of this example, we will assume you’re one of the best in the world (i.e. you make 20% returns).

Suppose your net salary is $50k and you have $20k in savings (which you will use for trading).

And let’s say you can consistently achieve 20% returns. So after a year you now have extra $4k you managed to day trade into existence. And your total savings now is $24k.

What If You Just Focused On Your Job?

You could do 2 things:

  • improve your skills
  • look for a higher paying job

So by working on just 1 thing you improved your skills which means you can get paid higher salary in your current job.

On top of that, you can increase your salary by switching jobs. Because even without increasing your skills, there is certainly some company that is willing to pay you more than you earn now.

And let’s say, each of these can increase your net salary by $10k per year. So a year from now you could be earning $70k. Just because of the fact you worked better, longer, and you send couple of emails and went to a job interview.

After a year of making extra $20k you’ve just doubled your saving. You have 100% return on investment. Not to mention, this increase was completely risk free.

Risk & Reward Comparison

So with your day trading side hustle (if you’re the best in the world) you now have $24k even though you took enormous risk.

And with your job, you have $40k in savings.

As you can see, trading and investing doesn’t make much sense if you don’t already have considerable amount of money. Because with small amounts it’s just a waste of time.

Also one thing to mention. With day trading, your risk of not improving on your job and having bad performance increases.

This can lead to you getting fired. Then you’re suddenly losing a full salary amount every month (until you find a new job and this also takes more time).

Better Options

Ok, maybe you don’t really like your job anyways. And you want to find a way to generate income in other ways and day trading was just something that crossed your mind. But you’re open to other suggestions…

In that case I suggest you read an article on how to start side hustle from your phone which is very low risk, very flexible, and doesn’t require huge amounts of time to get you decent results.

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