Day Trading and The Risks – Are They Worth It?

Posted by jessica on September 28th, 2021

Earnings Can Be Big and So Can The Losses For A Day Trader

Day trading is very popular among investors because this style of trading presents a higher earning opportunity than long-term investments. Stock values continually change during the day, and avid day traders take advantage of such fluctuations in order to make profits.

These frequent movements in the market do allow you to make more money from day trading but sometimes people get so carried away in making trades that they forget that the risk of losing money is also much higher here than in other methods of stock trading.

Day Trading Is Action Packed

There is no question that day trading is indeed an exciting experience. It is very fast-paced and the opportunities for making money never stop throughout the day. But then, the risk for loss is also always present. In fact, many people compare day trading to gambling, where money can come and go in the blink of an eye.

You can reduce the risk of loss considerably by being extremely watchful and by employing the right trading strategies but you can never completely eliminate the possibility of losing. For the conservative trader, this idea may be very scary but for the adventurous investor, it only adds to the excitement of the venture.

Losses Are Minimized When You Know What You’re Doing

Dedicated day traders are able to bring down their losses to a minimum only because they have spent a lot of time and effort in perfecting their strategies and formulas. Most of these masters of the trade will fiercely guard their secret trading strategies and keep them only for their own personal use. But there are also some who are quite willing to share their formulas with other traders, for a reasonable price of course.

There are many markets where you can do day trading but most investors prefer doing their transactions on NASDAQ, or the National Association of Securities Dealers Automated Quotation System, which makes day trading a lot easier. Keeping a close eye on your trades, however, can still be a tedious process that requires complete focus. As a matter of fact, people have been known to sit in front of their computers for hours, even missing lunchtime and bathroom breaks, while monitoring their trades.

Becoming A Full-Time Day Trader

At first, you would wonder why people would spend so much time on day trading, sometimes even giving up their regular jobs in favour of becoming a full-time day trader. But when you realize just how much profit you can stand to earn from this venture, and once you experience the excitement first hand, you will look at day trading in a whole new light. Sure, it can take up a lot of your time and even cause considerable stress at times but when your priority is to make monetary profits, it definitely gives you a lot of opportunities.

Is day trading worth it? 

In simple words, Day trading is not a good idea until you are not aware of market fluctuations and trends. Day trading is mainly used for performing short term trades because of its volatile nature. Day trading investors perform the trade during day hours only. They buy stocks in the morning hours and sell them on the same day before market closing. If the price of stocks rises, the day trader will gain profit, whereas if the price drops during the day, they have to bear losses.

Another thing that stops people from doing day trading is transaction costs. The two highlighted transactions are fees and taxes. Most online brokers do not charge commission fees from their clients. Try to give preference to commission-free brokers. 

Conclusion

Day trading is not an easy task. It requires more attention and time compared to other trading styles. But it is the best source of generating profit in short term investment due to its volatile nature. Before starting trading on a live account and risking your actual money, you must create a demo account on your broker\'s platform. Most of the online brokers offer demo accounts such as ROinvesting nd Capixal.