Thursday, 6 July 2017
Day Trading: Not For Everyone
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success tips
It doesn’t matter if you’re giving your first steps in the financial world or you already have some experience in it. There is a strong probability that along your way, the term “Day Trading” has came across your path eventually.
In the last few years, day trading has benefited from increasing popularity mainly due to a wider internet access, the use of smartphones and the promise of huge profits in a relatively short period of time. These factors allowed retail investors to take faster decisions during the day, without caring whether they’re in town or in the middle of holidays.
Traders are free to choose in which grade of day trading they want to fit in. Pure day trading implies you’re buying and selling assets in the session and always ending it in cash, without open positions to be held overnight or longer.
But day trading is not for everyone and that’s something small investors should understand before even considering it as a professional alternative. And here is why:
- Big initial investment
Day trading, unlike many blogs out there write, it’s not for newbies. First, because you should have some experience in trading. And second, because of the initial investment. While nowadays you could open a trading account for as little as 5 USD and work mostly on margin, day trading is all about volume. A typical day trader is looking for short, very short term opportunities and therefore, movements are limited to a few pips. In order to turn small price changes into profit, trading volumes should be big enough to make a difference.
- Constant learning
To become a successful day trader, financial knowledge and experience is required. But it’s not a one-time thing, it’s more of a everyday learning. And of course, there is another component: self-discipline. Because you’re basically on your own when it comes to studying and learning. However, we strongly suggest finding forums, trading meetups and chat partners.
- Heavy money management
It’s relevant to note that day trading is a very risky path and you should be prepared for the worst if you take it. Meaning, you could have a series of bad trades, may be 3 or may be 10 and only start recovering afterwards, which outlines the importance of money management.
- Higher commissions
Day trading involves a larger number of transactions on daily basis, resulting in higher commissions. If you are planning a day trading career, you should keep this factor into account before moving forward. You can check FortFS accounts and see which one fits you better.
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