Written by Katie Gomez

Many young stock traders get into the world of trading because they see making money doesn’t have to be as hard as it was when their parents were their age. In addition, Millennial and GenZ traders have the advantage of watching how hard their parents worked. While some saw the physical toll their parents suffered through painful back-breaking labor, others saw their parents endure the emotional toll of soul-sucking corporate jobs, inspiring the question, “isn’t there another way to make money?” 

The younger generations have created new career norms, from Etsy sites to the gig economy. 

A vast market still needs to be tapped within the younger generation: the stock market. In this article, I will explain how stock trading can act as the epitome of the phrase “work smarter, not harder” and how to avoid its pitfalls. 

We see some striking differences between GenZ and older generations regarding work ethic. Many think that the younger generations are simply lazy and don’t want to work, but could it be that they are just better at thinking outside the box? To a member of GenX or Baby Boomers, the act of quitting your job to start an online business would require a psychological evaluation, but to GenZ, that is considered normal. The work ethic and mindsets of the younger generation may seem unconventional, but that doesn’t make it wrong.

Their open-mindedness and intuitive nature provide them with tools to explore more innovative means of “making a living.” We see that today with the introduction of new job markets, remote work, entrepreneurship, the gig economy, and other opportunities. That said, stock trading is the perfect career shift, so the sooner you learn to take advantage of it, the better. 

Why should I start trading?

Stock trading offers many of the benefits younger individuals look for today. For example:

1. Autonomy & flexibility: Working on your own time clock instead of punching into one. In addition to choosing when to work, you can work anywhere you desire (i.e., office, remote, home, traveling, etc.).
   
2. Growth potential: Investing in the market can provide you with opportunities for growth in wealth over time, as long as the investments are well-researched and well-managed.
   
3. Learning opportunities: You will not only learn things about financial markets,
   economics, and investment strategies but also about your emotions, decision-making patterns, and self-confidence. 

4. The early bird gets the worm. The earlier you begin investing, the more of a head start you give yourself to build wealth and reach financial goals sooner (not having to wait until you are 65 to retire). 

5. Choose your player:
   

• Retail Trader (Level 1): Trading as you please, easy access using brokerage or apps like Robinhood—especially easy for younger traders who are more adaptable and tech-savvy than older traders. Also, many of the trading apps allow fractional share trades and low minimum account balances. 

• Swing Trader (Level 2): More active than retail trading but more flexible than day trading. As a swing trader, you can keep trades open overnight, whereas day traders sell before the market closes. Swing is usually the better option for newer traders because it requires less commitment, skill, and expertise. 

• Day Trader (Level 3): This kind of trading takes the most commitment, a full-time trading schedule from market close to open, needing great attention to focus on moment-to-moment decisions (consistently buy and sell throughout the day). Advancing to this level will be a challenge, but it can eventually make trading your primary source of income. 

The beauty of choosing your trading player is that you can work as much or as little as you want, depending on your schedule, and create a flexible routine or regimen that works for you. Like any other game, starting at level 1 is your best bet to determine your skill level and commitment to your trades. While trading may blossom into a full-time career, many traders trade for supplemental income, treating it as more of a part-time job or side hustle.

What are the drawbacks of trading?

Of course, there are also cons to deal with when it comes to trading. It is up to you if these drawbacks are things you believe you can work through or things that would deter you from trading as a whole.

1. Risk of loss: There are no guarantees in the stock market, it is a risky game. Therefore, you must ensure you have a nest egg to avoid trading scared money so you never have to worry about losing the money you need to survive. The more emotional stake you have in your investments, the riskier they become. 

2. Time commitment: Successful investing requires research, analysis, and monitoring of stock prices, which can be time-consuming.

3. Lack of diversification: Tunnel vision on one stock or putting all your eggs in one basket often leads us to disappointment. Therefore, it is crucial to spread out your investments to decrease the risk of losing everything in one company/stock/equity. 

4. Emotional decision-making: Trading is an emotionally charged profession, and young people may be more susceptible to making more impulsive decisions (usually to satisfy the urge for immediate gratification). Be careful not to let emotions cloud your judgment while making trading decisions; instead, rely on research and logic to provide you with a trustworthy financial analysis. Over time it will be easier to utilize your critical thinking skills and logical mind to dissuade emotional decision-making, but it will take time and practice to learn this. 

Whatever your intentions are, trading can be a gateway to financial freedom, which your parents or even their parents never got to experience. The autonomy that trading offers will help you practice discipline independently and learn how to navigate your way to success. Although stock trading is often viewed as an esoteric practice or a high barrier to entry, anyone (regardless of age) can learn to trade so long as they have ambition and patience. Trading is not easy, but it is much simpler than people think with the right tools and guidance to help you along the way. If you are searching for the next avenue to work smarter, not harder, learn how to start your journey today at Trade Ideas.