Day trading, the practice of buying and selling stocks in an effort to get rich quickly via highly liquid assets. It’s kind of like hoping that one toy you bought at a garage sale will one day turn out to be a collector’s item so that you can resell it for big bucks, but it has to be done on the same day.
It can work, if you’re either very good, very lucky, or some combination thereof.
But, it is very risky, so let’s go over a few pros and cons before you hope into the art of day trading.
Pros:
1. You can earn a large amount of money in a short time frame, provided you can afford to buy and sell on short notice. You need to understand the market, stock value, and have a working knowledge of leverage (basically borrowing money to make more money) in the financial world, but it is possible if you’re willing to try.
It is also possible to either get, buy, or find software that can help you track which stocks are on the up, and which are falling.
2. It’s short. It is called day trading, after all, you don’t have to worry about long-term risks or falls, since you’re supposed to sell or buy within a day. That means results, both successes, and failures, come instantly, and you don’t need to stress over ‘what if’s.’ Once something is sold, or bought, it’s done.
At the end of the day, what’s in your account is in your account, nothing will be taken when you head off to bed, and that alone is a relief.
Cons:
1. You need a bank account with at least $25,000 in it, and be willing to go through it quickly. For lack of a better term, day trading is expensive, fast-paced, and is not always for the faint of heart, or the light of wallet.
The adage: “Spend money to make money” applies in full swing here, so it is not the choice for everyone who is struggling with their financial status. It is possible to start smaller and work your way up, but again, you need to be aware of how much money you’re likely to spend, and how expensive stocks can be.
If you want to go this route, be ready to have disposable cash on hand or set yourself up a budget.
2. It is addictive. Like, really, really addictive. The rush of buying low and selling high, seeing your numbers rise more and more. But, in doing so, you run the risk of overdoing it mentally, and therefore, run the risk of draining your account dry.
It is gambling, for better or worse, and plenty of people know what a gambling addiction will get you. If you’re interested in day trading, one of the first steps you should take is to pick a forex broker. You should thoroughly research the available online brokers before investing. One notable option is reading a Capital.com review.
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