I have read dozens of threads saying you need to keep your BTC on a hardware wallet or paper. Anything online isn't safe they say. When trading that is not really feasible is it? I like to move in and out of positions several times a day and often at a moments notice. My trading account has a sizable balance (to me - 5 figures) in it.
How risky is this and any additional things I could do?
Keeping all your funds in an exchange account is very risky. Anything can happen with security and anything can happen with the exchange itself. The best is to keep only the amount you trade with in the exchange and withdraw the rest at least when it is substantial enough for withdrawal.
Yes , like the situation of btc-e.com , those traders keep all their btc-e in that exchangers is nearly lost everything. Luckily , Btc-e is back but they only give back 55% percent of the balance , so choose the right exchanger is the key , cause you're not , you probaly can lose everything, LR and btc-e are examples.