The Importance of Day Traders: The Unique Role that Self-Employed Traders Play in Society and the Stock Market

By their definition, day traders typically buy and sell stocks, foreign exchange, futures and other securities, entering and exiting positions throughout the day. Using their own capital, day traders aim to make small – but frequent – gains by closely watching the financial markets throughout the trading day.

Within this category, there can be brand-new, independent traders all the way up to institutional day traders who all share in common a shorter time horizon, differentiating themselves from longer-term investors. Day traders pay close attention to supply and demand, patterns in pricing and the overall emotion of the market on a daily basis, while contributing to the global economy. Ideally, they take advantage of short-term and often small changes in the price of a given security.

Day traders average about $58,000 in salary per year, according to Glassdoor. Beyond personal income, however, they also provide larger value to the stock market and society alike.

What a day for a day trader

Skilled day traders certainly offer research and expertise that can benefit other traders and investors. They monitor financial markets throughout the world, examine analyst as well as media coverage, and perform crucial research on the markets and financial trends. In addition to all of this, following are five key benefits that day traders provide:

1. Day traders reduce market risk through volume. Through their near-constant act of buying and selling stocks, forex and securities, day traders create liquidity in the market and increase the ongoing volume of trading, thereby reducing risk. Their work makes it less risky for other traders and investors who aren’t trading with such speed.
2. Traders help us decipher what is trending, what is positive and what is cause for concern. Throughout the business day, traders are active in interpreting everything from a particular company’s quarterly results to the latest release from the Fed to global news and events. Their analysis and action can help others identify important trends in the market and the world and react accordingly. In essence, they do the dirty work.
3. Many day traders are willing to share their secrets. From best-selling books to blogs to podcasts and more, many successful traders have been more than willing to pass on the secrets of their success. They will divulge tips on mindset and psychological training, the best resources for learning the ropes, when to take a break and risk management strategies, for starters. Anyone interested in trading can garner a wealth of wisdom from the best in the business – something not often seen in other jobs or industries. Even better, much of this knowledge is applicable to a variety of trades and professions.
4. Traders can bolster the economy. Companies make money as does Wall Street when day traders take action. Likewise, commissions paid by traders support the livelihood of others in the global economy. By offering what is technically a free service, day traders make a definite contribution to the economic welfare of others.
5. They support new technologies. Traders rely on technology for analysis and up-to-the-second insights. To that end, they have prompted the development of new platforms, new charts and new apps, which benefit others in the world of investments.

And here’s one more benefit: Day traders pay taxes on their income, which can then be used to fix bridges, support public programs and ideally create a better society.

And one more: This career is open to anyone. It is agnostic of age, color, sex, religion, culture or background. While many new traders will struggle or fail, this profession is accessible to anyone with the funds to begin trading (traders must maintain a minimum of $25,000 in trading accounts on any day they trade). Nor do many traders require expensive office space, large teams or close management.

Prism MarketView offers market updates, trending news and more for traders interested in small-cap and micro-cap companies across life sciences, medical devices, diagnostics, genomics, biotechnology and the digital economy.

Day after day after day

With more people stuck at home during the global pandemic, the popularity of day trading has skyrocketed, with many companies reporting record numbers of new accounts throughout 2020.

Market swings can be appealing to day traders. But anyone dabbling or diving into this career must be prepared for the highs and lows of this profession – often in a single day or single hour. The gains can be spectacular – but so can the losses, which is why it’s important to prepare, research, plan, and know when to hold or fold.

Traders and investors of all levels make an impact on the market, the economy and society – day traders just have an opportunity to do so day after day after day.