December 15, 2017

Day Trading for Dummies

Day Trading for Dummies

Whether you’re looking to make some quick money from home, or have simply seen Wolf of Wall Street one too many times, you may be wondering if playing the stock market as a day trader is right for you. But before you put your legs up on your desk and daydream about being the next happy billionaire, you’ll need to do some research—and arm yourself with the necessary tools to compete against the 1-2.5 million day traders who are out there hustling for success from dawn till dusk.

What exactly is day trading?

The average person’s knowledge of the stock market often starts and ends with movies and television shows. However, day trading is an entirely different beast than swing trading and long-term investing.

Day traders, as the name implies, are all about buying and selling the same security within a single day to profit from small changes in the stock’s price. Day traders don’t care about watching stocks over the long term. Think of day traders as the SWAT team of the stock market: they get in, they get out, and they minimize risk while accomplishing their mission.

Since day traders hold their securities for only one day, they’re not concerned about how they are affected in the weeks or months that follow. If you think day trading might be a good fit for you, ask yourself this question: Am I ready to sit in front of a computer screen all day, react on the fly to nuggets of information and data, make quick decisions, and execute a large quantity of trades? Or would I rather just take a nap?

Pros of day trading

Many people view day trading as a “get rich quick” approach to investing. While the getting rich part of day trading is easier said than done, it does offer some attractive pros over more orthodox trading methods:

  • You get to work for yourself, set your own hours, and wear your bathrobe and slippers all day.
  • There is no expensive education required before you can start trading.
  • Day trading can be an exciting job where highs are very high.

If you’re like most people, the real lure of day trading lies in its ability to generate substantial profit in a very short amount of time. However, to become a successful trader, you need dedication, diligence, determination, decisiveness, and a healthy amount of luck.

Cons of day trading

One of the problems with day trading is that you are your own boss. It takes discipline and commitment. You need to crack the whip on yourself. Didn’t sleep last night? Too bad, get up and trade. Hungover? Get up and trade. Eyes burning from screen glare? Get up. And. Trade.

Some of the cons you should be aware of for day traders include:

  • There’s always a risk of losing a substantial amount of money and never recovering or advancing to the profit-making stage.
  • It requires intense focus and concentration every day, which can cause tremendous stress and ultimately lead to a burnt-out trader.
  • Day trading is a highly competitive atmosphere that may require you to dig deep in your pockets in order to get started and go toe-to-toe with the top traders.

Like anything worth doing, day trading requires some degree of blood, sweat, tears. However, you can make your journey to the top easier by using tools like Charitfy to track and compare your trading performance as well as follow day traders out there.

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