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Last Updated: Feb 18th, 2008 - 14:39:01 |
Day Trading Benefits – What are they?
Although previously considered to be the exclusive domain of floor traders only, day trading is now an option for anyone speculating on the market. With the advent of improved communication technology, affordable computers, the lure of large intra-day price swings and competitive commissions, day trading is gaining in popularity by leaps and bounds.
Day trading has often been vilified. There have been many pros who have openly condemned day trading. Even responsible institutions have at times raised serious doubts against day trading. But fact is, with real-time quotes available, improved computer technology, and next to nothing commission rates, day trading at his point of time makes ample sense.
There are definite benefits when it comes to day trading.
You don’t have to be concerned about overnight news
This is a big plus with day trading. Since you are completing your trading within the span of a single day, it doesn’t matter if something big happens overnight which you cant deal with the next morning when the markets already start in a bearish note. With day trade you know what you have made at the end of the day, whether you win or lose.
You don’t run the risk of riding losses
Since you finish off with your trading within a day you may lose but you avoid losing more the next day as you don’t hold on to your stocks. So if any stock of yours suffers significant losses over a few days you are not affected to a great extent.
You can capture large price swings
If you are into day trading it means you are always on the ball. So nothing that happens in the market escapes you. If any news or event results in large price swing of any particular stock you are there to capture it. A constant monitoring of the market is needed for this. You have to have the patience to wait for the event to happen. When the event nears you have to anticipate it through your analysis and instinct. And when it actually happens you have to grab the opportunity as quickly as possible.
You get instant feedback
With day trading you don’t have to worry long as to what will happen to your money. You are buying and selling the same shares in a single day. So by the end of the day you know how much you have made that day. You may have made a profit or you may have lost. But whatever has happened the results are right there in front of you in the evening.
But, if you are thinking about being a serious day trader you should also be aware of the risks you are about to take.
You encounter significant intra-day volatility
At times stock prices suffer significant swings within a single day, but the swings generally get corrected over a period of time. Being a day trader you cant wait for the correction to take place and you may end up losing big time.
You need a sizeable investment
If you are seriously contemplating day trading you would be required to make a significant investment. You need to get yourself the best hardware around, the pretty expensive software platforms which are must-haves, you need to pay a sizeable amount to gain access to all the live quotes and news. So before you take the plunge, do some soul-searching and decide whether you are really that passionate about getting into this.
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