Day trading involves the use of technical analysis and charting systems to execute multiple trades in one day.
Swing trading trades based on fluctuations in the prices of stocks, commodities and currencies that occur over a period of days or weeks.
Traders must choose a strategy that complements their skills, preferences and lifestyle.
Day trading
Day trading, as the name suggests, involves making dozens of trades in one day based on technical analysis and sophisticated charting systems. The goal of the day trader is to make a living trading stocks, commodities or currencies, making small profits on numerous trades and limiting losses on losing trades. Day traders usually do not hold any positions and do not own securities the next day.
The biggest draw in day trading is the opportunity for impressive profits. But this is only possible for that rare person who possesses all the essential qualities required to become a successful day trader, such as determination, discipline and diligence.
The US Securities and Exchange Commission (SEC) notes that "day traders usually suffer serious financial losses in the first months of trading, and many of them never reach profitable status." While the SEC warns that day traders should only risk the money they can afford to lose, in reality many day traders suffer huge leveraged losses, either due to margin trades or capital borrowed from family or others. sources. These losses could not only negate their day trading careers, but also lead to significant debt.
Day traders work alone, regardless of the whims of the corporate tycoons. They can have flexible work schedules, take breaks when needed, and work at their own pace, unlike those who work on a corporate treadmill.
Day traders have to compete with frequent traders, hedge funds and other market professionals who spend millions to gain trading advantages. In this environment, the day trader has no choice but to spend large sums of money on the trading platform, charting software, modern computers, and the like. Ongoing costs include the cost of obtaining real-time quotes and commission costs, which may increase due to trading volume.
