Can You Trade in a Roth IRA Account?

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Many Americans choose a Roth IRA as one of their retirement savings accounts. Over one trillion dollars are currently being held in Roth IRA accounts, much of that traded during the lead-up to retirement.

Day trading is a popular activity for some kinds of investors. But can you engage in day trading with your retirement accounts? And if you can, should you?

What is Day Trading?

Day trading is a form of speculation where the buyer seeks to buy and sell securities during the same trading day. That means that while the markets are open, they are actively seeking to make a faster profit.

Day trading, as a plan or process, can technically be undertaken in any given market. But due to the nature of day trading, it is more common and easier to succeed in a select few markets. Stock markets, foreign exchange (FOREX), and cryptocurrencies are markets where day trading is more common. Highly liquid markets, including some volatile markets, generally offer more favorable conditions for day traders.

Compared to other strategies for profiting from securities, day trading is more stressful and technically challenging. It’s also far riskier. Successful day traders are more often well-educated and equipped individuals or businesses/funds. They need to be skillful and well-equipped to foresee and profit from small and fast price movements. 

To succeed in day trading, traders need to connect themselves closely to market drivers. They need to be up-to-the-minute with short-term movers. They also must follow the scheduled release of information from statistics and news providers. They follow releases such as:

  • Government economic reports
  • Corporate financial documents 

They also study market psychology and other factors influencing the prices of the securities they trade day to day.

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Day Trading Considerations

Day trading requires traders to take several considerations. It’s a controversial practice that involves energy and skill. The SEC doesn’t consider day trading to be investing, and neither do most traditional investors. So, it requires a different approach.


Day traders can profit from the professional and correct execution of a number of strategies. Most require immense skill and state-of-the-art technology. Strategies such as pattern day trading and margin calling must meet requirements set by regulators to be considered as such.

Understanding the Difficulties

Day trading is much harder than passive investing as well as other forms of trading. It’s not a practice that is easy to succeed in without preparation.

There are several traps in day trading. The established professionals understand that, and they have incredibly fast and expensive trading technology. They also often have many personal connections that help them. They have every advantage that one could hope for, yet even they can sometimes still fail. After all, the pros are trying to profit off of the most minute price movements. They are skimming several cents at a time in some cases, and there’s plenty of room for failure.

Overcoming these difficulties, as well as the biases most people hold, are serious challenges for prospective day traders.

Active Trading vs. Day Trading

Day traders are active traders, but not all active traders are day traders.

Day trading is a form of active trading. Active trading describes any kind of trading strategy where the trader attempts to profit from short-term price changes. There are several strategies that fall under the “active trading” umbrella, including scalping, swing trading, position trading, and day trading. 

Day trading is one of the most popular active trading strategies. Active trading strategies require more effort than more basic long-term strategies to perform well in. Day trading is no exception.

What Restrictions Are There for Trading in an IRA?

Day trading isn’t an activity that lawmakers had in mind when they authorized the Employee Retirement Income Security Act of 1974 and enabled IRA investment. They were designed to help people make long-term investments for retirement – not to help people shelter their day trading activities from taxes.

That being said, it is possible to engage in trading in an IRA. However, anyone wishing to do so should keep in mind the prohibited transactions. When it comes to IRA transactions, all the relevant restrictions are stated in IRS Publication 590. Section A covers contributions, and section B covers disbursements.

Most restrictions on IRA transactions are regarding how much you can contribute to an IRA. Breaking down what is allowed and what isn’t is often clearly stated, though some aspects are left to interpretation. For example, the use of margin in an IRA is prohibited. That ultimately means that strategies involving margin trading are prohibited. 

Another unwritten truth is that different brokers set different rules for trades in their Roth IRAs. For example, Charles Schwab allows investors to engage in spread trading, as long as their balance is $25,000 or more. You, therefore, need to check with your broker to know what activities they permit.

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Investments in an IRA

Many kinds of financial assets can be invested in through an IRA.


You can purchase stocks in various companies through an IRA. You can then receive the tax benefits of an IRA to help you save more efficiently for retirement.

When you buy shares in a company, you are buying a portion of the company’s ownership. This entitles you to participate in shareholder activities and to receive dividends. You can choose to sell your shares and can produce a profit by selling for more than you purchased them for.


An exchange-traded fund is a fund that tracks an index. ETFs can track a stock index such as the S&P 500, or they can track assets such as commodities, or also industry sectors.

ETFs are a popular IRA investment because they offer investors a more hands-off way to save for retirement. ETFs track indexes or sectors instead of specific companies, meaning they offer diversification and the increased safety that comes with it.


Options are financial derivatives. They allow investors to buy and sell underlying assets at prices and dates agreed upon in advance. There are different types of options that enable this in different ways. For example, call options allow an investor to buy an agreed-upon amount of any security at a specified price and time.

Options represent a diverse financial instrument that are used by advanced traders as a part of several different investment strategies.


Cryptocurrency is a new kind of digital asset enabled by the advent of blockchain technology. It is a newer kind of asset than most that we’ve gone over, but individual cryptocurrencies are becoming increasingly popular for their potential for massive growth. As financial assets, they are volatile compared to other asset classes.

You can place cryptocurrencies in a crypto IRA to gain the same tax benefits that with a traditional individual retirement account. In order to invest crypto in your IRA or Roth IRA, you need to create a crypto IRA account with a provider of these types of investing accounts.

iTrustCapital is one of these companies that allows you to easily open a crypto IRA account to invest in Bitcoin and other cryptocurrencies as part of your retirement plans. You can choose between Traditional IRAs, both IRAs and SEP IRAs, as well as 401(k)s. Visit their website to learn more and easily open an account; you can complete the entire process online.


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