Day trading for a living
Day trading for a living
Day trading refers to that form of trading in which an investor squares up his position in a single day. This means that the buying and selling is done during the same day. The strategy is to buy at the least price and sell at the higher price in the day. But it is not so easy to bake the cake of day trading. This is because there are some pre-requisites which an investor requires before making this trading for a living.
1. Strategy: The day trading strategies are to be designed in such a way that the stocks are sold at the highest price. Early exit or delayed entrance into the field can drop down your profits. So it is very important to enter the market at the right point of time so as to make maximum gain out of the stock.
2. Knowledge and Experience: As you are stepping a professional step into this market you need to have all the knowledge to build up the piles of experience. You need to be aware of the market fundamentals so as to judge the effect of any news or announcement by the company on the price of share. For instance the announcement by a company of amalgamating with some other renowned company can shoot up the demand of the share and so is the price. On the other hand a cancellation of some major contract can lead to downfall in the price. Thus one should be aware of the effects and their timings on the stock price.
3. Analytical software: The day traders and specially who are professionals and are investing on behalf of others would require software to carry out their dealings. The softwares help them in keeping the record of the transactions and indicating their worth during the way. These softwares also give patterns to recognize the strength of stock in the previous period.
Benefits of Day Trading
1. Low Capital requirements: If you are trading on behalf of others then you have to invest your money in gathering all the information, knowledge and setting up an online terminal. These all do not pile up you with bunch of burden because of the earnings in this business. You as a broker can earn commissions and brokerages if you figure everything well.
2. Low Margin requirements: Day trading attracts a large number of investors because of low margin requirements due to the short trading cycle. Thus the investors need to block only little amount in form of margins.
3. No overnight risks: As the name suggest this trading is carried out only during the day. Because the position is to be squared up the same day when you bought it you do not sleep with any overnight risks. The evening announcements by any company and its effect on opening stock prices will certainly not affect the portfolio.
Thus prevalence of day trading for living is undeniable. It is persisting and people are making profits with their knowledge and skill. So trade wise and make your earnings rise!