Day trading (intraday trading) — as the name suggests, involves the execution of dozens of transactions in one day based on technical analysis and complex charting systems. This type of trading is also called intraday, and traders are called intraday traders, or simply day traders. The goal of an intraday trader is to make a living trading stocks, futures, making small profits from numerous trades and severely limiting losses from bad decisions. The biggest draw in day trading is the potential for impressive profits. But not every person can realize this potential. A day trader must have such qualities as determination, discipline and diligence. They are absolutely essential in order to be successful on an intraday roller coaster.
Benefits of intraday trading
A day trader works one whole day, regardless of the whims of his superiors. He may have a flexible schedule, rest as needed, and work at his own pace as opposed to being hired. For many finance jobs, having the required degree from the relevant university is a prerequisite just for an interview.
In contrast, day trading does not require expensive college education. You will find many free training videos and articles online that can be useful to improve your level. All positions should be closed by the end of the day, and no position will remain overnight when trading intraday. The trader can sleep soundly at night as there is no risk. You can gain experience in a short period of intraday day trading.
Day traders usually make up to 10 trades every day. It is smaller than scalpers. But, in fact, every day a trader gains knowledge and develops skill. Although this type of trading is the most attractive, most people who trade intraday exchange instruments cannot make money. Lack of preparation and discipline tend to cause them to fall. However, for those looking to do their homework, develop a trading plan and stick to it with diligence, it can be a profitable venture.
Full employment. To try to become an intraday trader, you need to quit your day job and give up your constant monthly salary. From this point on, the day trader becomes totally dependent on his skill and effort to make profits, pay bills and lead a dignified life. Trading under the pressure of responsibility is an unfavorable factor.
Day traders must compete with robots, hedge funds and many market professionals who spend millions to gain trading advantages. In this environment, the intraday trader often has no choice but to improve his competitiveness through advanced analysis and trading software.
Similar to scalping, intraday trading is stressful by having to watch multiple screens for opportunities and then act quickly to exploit them. This has to be done day in and day out, and requiring such a high degree of concentration and effort can often lead to burnout.
High dependence on commissions. For example, an active intraday trader with a $ 20,000 deposit working with e-mini S&P contracts can very well accumulate a total commission of $ 5,000 to $ 10,000 at the end of the year.
Lack of preparation and discipline tend to result in losses. Day trading can be an unforgiving game. However, for those willing to grow, develop a plan and adhere to it in a disciplined manner, day trading can be a profitable venture.