Day Trading - Merits and Demerits
The usual goal of a day trader is to actually be able to capitalize on the price movements within just one trading day.
A day trader, unlike the different investors, holds positions for only a few seconds to minutes and it never extends overnight.
Here are some of the merits and demerits of day trading: Merits: 1.
No overnight risk: There is no overnight risk, due to the fact that the positions are closed once the trading day ends.
2.
Greater leverage: Day traders actually have an edge of gaining or acquiring greater leverage together with their trading capital 3.
More profits: There is profit in any market direction since in day trading; you will only utilize short- selling in order to take advantage of the very fast declining stock prices.
Demerits: 1.
Overnight Gaps: If you are a day trader, there is a big possibility that you will actually miss out on the overnight gaps that occur.
In those overnight gaps, you expect that there are actually high profits which can take place; 2.
More Focus: In day trading, you are obliged to focus on the market for very long periods of time; this is not suitable for traders who actually need to fulfill other obligations during the day which leaves many traders frustrated.
3.
There are times that even if the market is moving with a great or big move but your trades will still be the same.
In day trading, you should sometimes expect that even if there is a big change in the market status, you will still be able to end up with either break even or a loss.
A day trader, unlike the different investors, holds positions for only a few seconds to minutes and it never extends overnight.
Here are some of the merits and demerits of day trading: Merits: 1.
No overnight risk: There is no overnight risk, due to the fact that the positions are closed once the trading day ends.
2.
Greater leverage: Day traders actually have an edge of gaining or acquiring greater leverage together with their trading capital 3.
More profits: There is profit in any market direction since in day trading; you will only utilize short- selling in order to take advantage of the very fast declining stock prices.
Demerits: 1.
Overnight Gaps: If you are a day trader, there is a big possibility that you will actually miss out on the overnight gaps that occur.
In those overnight gaps, you expect that there are actually high profits which can take place; 2.
More Focus: In day trading, you are obliged to focus on the market for very long periods of time; this is not suitable for traders who actually need to fulfill other obligations during the day which leaves many traders frustrated.
3.
There are times that even if the market is moving with a great or big move but your trades will still be the same.
In day trading, you should sometimes expect that even if there is a big change in the market status, you will still be able to end up with either break even or a loss.
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