The election converts trading results from capital to ordinary. Wash sale deferrals disappear, the $3,000 capital-loss-limitation disappears, and a large loss can offset other ordinary income or create a net operating loss.
The price is the loss of long-term rates on anything left in the trading account, plus the year-end deemed sale of open positions. Investment positions must be clearly identified and segregated on the day of acquisition to stay outside the election.
Timing is the trap. For an existing individual filer the election must generally be attached to the prior year's return or extension, by the original due date in April, not at year end, and a Form 3115 accounting method change follows. It requires trader-tax-status to be available at all, and securities-only elections do not automatically cover section-1256 contracts.
This is general information for the United States, not tax advice. Rules change and depend on your circumstances; consult a qualified tax professional before electing.
Related: trader-tax-status, capital-loss-limitation, wash-sale-rule, schedule-c-trading-business, section-1256