If you look at some websites around the net you’d think that day trading was some kind of disease or something. So much bad press surrounds it that you would thing that anyone who tries it must be nuts! So what exactly is day trading anyway?
That’s easy. Day trading is simply entering a trade on or after the opening of the day’s trading session and exiting a trade on or before the close of the day’s trading session. So logically the length of a day trade is no more than a single day.
Does day trading have risks? Of course it does. In fact all trading and investing has risks. Day trading became popular when the availability of real-time market data expanded to the masses. It appears that many trader became more fascinated with some of the fast-paced action rather than with the actual bottom line. It is true that some traders need more action than others and day trading may provide a way for those traders to satisfy their need for trading action.
Day trading is a method of trading and as such it is a tool. Now this may or may not be the right tool for you to use to build your fortune, but that depends on far too many factors for us to go into in this brief introduction.
A Few Day Trading Advantages
No over night positions - With the volatility of the markets constantly changing there are people who definitely prefer to be flat (holding no open positions) at the end of the trading day.
Rapid Feedback – Day trading gives you rapid feedback which allows you to see how well your trading system works in a relatively short period of time. Please keep in mind that making a fortune in the market is not a short-term proposition although the time frame you trade in may be.
A Few Day Trading Disadvantages
Typically increased transaction costs - Transaction costs are typically higher because trading frequency is typically higher.
Typically does not take advantage of a large move – Trend followers live for the big move and day trading is simply not equipped to take advantage of the big move. Some would consider this to be a big disadvantage although day traders would argue that they make enough smaller profits to equal or surpass the profits in a big move.
If you choose to day trade or do any other type of trading, remember that there is absolutely no substitute for preparation. Dot your i’s , cross your t’s and prepare to trade successfully.
To Your Trading Success!
Whether you're a beginner or a seasoned pro you'll discover the best Day Trading tips, tricks, and techniques as well as valuable tools, resources, and information at www.tradingknowhow.com
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