A stock price can change in seconds. For someone watching the market, those seconds can mean the difference between making a profit and losing everything. For young adults hoping to earn extra income, day trading can seem like an exciting opportunity. However, the possibility of making a quick profit comes with great financial risks and emotional pressure that can easily be overlooked.
Day trading involves buying and selling stocks or other financial assets within short periods. While some traders develop strategies and experience success, others struggle with losses, trading costs and the pressure to make the right decision on time. For college students and young adults with little money to spare, those challenges can be especially important. Understanding the risks of day trading can help them make more informed decisions about their money.
Aden Juarez, a college student who has been day trading for a month now, has experienced just how mentally taxing trading can be. Optimistic about the prospect of making easy money, he threw hundreds into markets he knew nothing about after watching just one video about day trading.
“I was really optimistic about it.” He said. “I thought it would be really easy. It wasn’t.”
For beginners, the appeal of investing often lies in the possibility of making money in a short amount of time, rather than working long hours at a traditional job. Instead of waiting years for a long-term investment to grow, day traders attempt to profit from small price movements throughout the day. However, those movements can be unpredictable, and a trade that looks promising can quickly turn into a loss.
For Juarez, learning this has been part of his first month in the market. What began as an opportunity to make extra money also introduced him to the uncertainty that comes with making financial decisions without much experience.
Now afraid that his trades will go horribly wrong, Juarez hesitates when making trades, which leads to missed opportunities. One such moment was the creation of FTR, a coin for the Flying Tesla Roadster. He saw the coin on the night of October 15th when it was only worth $200,000. Not believing in the coin, or even bothering to do the research, the coin then skyrocketed the next morning to over $5,000,000.
“I should have researched it.” He said. “Even just a little bit of research would have told me that it was real, but I was scared and didn’t have faith.”
The risks of day trading extend beyond the money invested. When people closely monitor the market, changes in stock prices can create feelings of excitement, frustration or anxiety. A loss may also tempt a trader to panic and make another hasty trade in an attempt to recover the money, often leading to further losses. A 2026 study published in the journal PLOS ONE that surveyed 239 U.S. citizens found that cryptocurrency investors showed that higher levels of problematic crypto trading were associated with more depressive symptoms, anxiety symptoms, and social isolation.
“I’m genuinely so depressed thinking about it.” Juarez said, after having lost more than ten thousand dollars in trades. “I want to stop, but then it would be like I just threw all that money away for nothing. And that’s even more depressing.”
For college students, these decisions can carry additional weight. Money used for trading could have gone towards tuition, rent, groceries, or savings. Students who have limited income may have fewer resources to absorb the financial losses.
Unlike Juarez, who is still navigating his first month of trading, Carlos Dopazo Pelayo, a member of SMIF, the Student Managed Investment Fund, has already experienced the highs and lows of day trading.
“I got kind of addicted to it.” He said. “There was a point where I just kept looking at my phone every five minutes and it was affecting my studies, so I quit.”
He explained that he didn’t really care too much whether he gained or lost money because he wasn’t playing with a lot, but the thrill of seeing the numbers rise and fall was enough to keep him hooked like a gambler.
Now, Pelayo no longer day trades. After entering college, he learned the risks of day trading and has opted for the much safer long-term investing.
Inexperienced young adults with less trading experience tend to be much hastier with their trades. Oftentimes, when the market begins to dip, people will panic sell their assets. This is called paper handsing. On top of that, they are easily influenced by the media and influential investors.
A 2024 survey from FINRA Investor Education Foundation found that 62% of investors younger than 35 felt they needed to take big risks with their investments to reach their financial goals. In addition, 61% of investors under 35 made investment decisions based on recommendations from social media financial influencers.
Clayton Sudduth, another member of SMIF, discourages the use of day trading. He explains that day trading is not safe if you are trying to earn money. Oftentimes, you will end up losing money instead. It is an unpredictable and highly volatile market.
“You just shouldn’t do it.” He said. “And you shouldn’t listen to strangers on the internet telling you how to use your money.”
While he discourages day trading, he does encourage learning to invest. Sudduth actively invests long-term, using the money he earns to help pay for college. According to Sudduth, investing is not bad. In fact, it is something you should do, as long as you are smart with it.
For someone just starting out, learning to recognize these risks can be an important part of developing better financial habits. Research investments and setting limits can help people make more informed choices. These precautions cannot eliminate risk, but they can help traders understand what they are putting on the line.
