Is Day Trading For You? Why should you become a day trader?
ByOne of the things that you’ll hear from trading friends is that day trading is a highly stressful activity where you must sit in front of your computer, eyes glued to the price movements, all day. If you’re in a trade, you can hardly take a bathroom break because of what might happen within the short time frame, say 2 minutes, that you’re gone!And that’s saying nothing about the amounts of money that are at risk. You can lose your entire portfolio, which might be a life savings of over 30 years of hard work, in a matter of five minutes!
If these things are true, why does almost every trader consider going into day trading, at least, at one point in their trading career?
Here are some of the lures:
1. As stated in the previous posts, the very definition of day trading includes the fact that ALL of your positions will be closed before the end of the trading day is cited, by long time day traders, as a PEACEFUL thing. They say things like, “Sure, you’re under stress while in the heat of battle, but once that bell rings, at least you KNOW whether you’ve won or lost and it’s OVER until tomorrow!”
2. Do you hate to pay so many high priced commissions for your trading? In day trading, the commissions structure is based on a ‘per share’ basis, not a ‘per trade’ basis as many traders pay. This is particularly helpful when you consider the professional approach to trading – partialling in and out. This refers to NOT placing your full sized trade on or off at one time, but, instead, ‘fading’ in and out of trades with partial amounts of risk. Partialling allows you to take partial profits when the trade is going with you, yet to ‘cut and run’ if it starts to move against you.
3. The buying power of day trading is larger than it is in regular trading. This can, of course, be a boon or a bane, because it also means your LOSING power is greatly enhanced.
So why jump into day trading? Some day traders cite these reasons:
1. Work only a few hours per day and with the potential to make lots of money
2. All you need is a computer with high speed internet
3. Trade from anywhere in the world, where internet is accessible
4. Trade full time or part time.
5. Trade any time of day or nite (as in the case of the eminis. More on this, later)
6. No dress code required! (in the privacy of your home)
7. You can treat it as a business, but you don’t have employees, lots of overhead expenses or customers with which to deal
8. No travel time to and from work
9. You don’t have to trade today if you don’t want to or don’t feel like trading
10. Take time off (non-paid) whenever you want and as much as you want
11. Spend more time with family
12. Be your own boss and determine your own paycheck
13. Deduct expenses from your taxes, just like any other business
Like all things in life, it’s not all sweetness and apple pie. Read the next post and get LOTS more information before you even THINK seriously about day trading!
