If you are reading this article you may have already know about the exciting financial and personal rewards of day trading. You are curious about the fascinating tales of great monetary rewards and excited by the prospect of working from home. But you may also be aware of the disappointing story about people losing huge amount.
What is Day Trading Exactly?
In brief, day trading refers to transactions performed on financial securities within a time-restricted period of one trading day on the market. Put most plainly, it is the buying and selling of securities, which for the purposes of simplicity in the demonstration of this article, we will focus exclusively on stocks (but know that there are a variety of trading options, currencies, and ) limited only to the course of one trading day so that no open positions are held overnight.
Risk, Reward, Temperament and Time
(1) How would I feel if I lost money for multiple days in a row? How would I handle this occurrence?
(2) Am I able to accept that despite hard work, diligent research, and focused attention, I may still lose money?
(3) Am I willing to engage with volatile markets day by day while maintaining a rational, long-term perceptive?
(4) For the purposes of paying bills, debt, and supporting my living, do i require predictable income stream that is paid to me in intervals?
(5) Does the possibility of great gain with great risk energize me?
This risk is real. There is unlimited potential for loss. It is not possible to win everyday in the market and no guarantee for a predictable income.
Next, Ask Yourself The Following Questions
(1) Do I like working independently or do I require working with a team, in an office, or require the services of support staff?
(2) Do I work well within and unstructured, unregulated, or non traditional environment?
(3) Do I need traditional amenities that are already organized and available for me to choose from such as health insurance options, vacation days, and formal feedback?
Summary of Day Trading Features
* Short Holding Time / No Overnight Holding
The term ''holding'' refers to the stock you are trading. In the case of day trading, you will only hold the stock in its "position" (in trading, the position refers to agreement by the holder to either buy or sell that specific amount of stock) for the duration of time that market is open (9am to 3:30pm). This amount to just under a 6.30 hours of holding time.
As we have covered, holding the position for this specific time frame protects your stock from any overnight fluctuations (risk) in the market a time when you can not trade anyway). Once you close out your last trade for the day, you are essentially done done until you trade again the next morning.
* Expensive Startup Costs
Day trading requires some up-front components that will quickly add up in cost. Trading accounts require a minimum of $25,000 for a trader to make any trade, this amount must be viable in order to keep your trading access open. You will also need trading capital to actually make the trades an amount that can vary greatly for beginners, but its recommended you being with at least $500 to $2500. The above quoted refers to only the essential cost to initiate an account and being trading. Finally, there is education and training. It is advised that you take a day trading course from a reputable trainer, or, once you become comfortably proficient, you will want to invest in classes to hone your skills.
* More Expensive Brokerage And Fees
This should make sense since you'll be doing more trades, and you'll be trading everyday. Paying fees for each trade may take a large chunk from your these range from 20-30% depending on the level of service that is provided. It will be to your advantage to comparison shop, or to find firms that may offer special discounts if you opened your trade account with them.
* Are Compounded More Quickly
Here is some good news, day trading offers a faster return on your , which in turn, generate further . If you are making successful trade, you will see daily feedback in your account, and this can be feel immensely gratifying.
* Personality And Temperament
Are you able to sit focus on great variety of real time, streaming data for hours at a time? Are you willing to forgo a traditional work life with corporate benefits and support? We have already covered the basic personal qualities of self discipline and independence required for a successful trader.
Hope this post enhance knowledge of stock market beginners.
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