Quick speculations by day traders can be interesting for several reasons:
- The opportunities are to be seized on a daily basis, which gives the trader the possibility of pocketing gains every day. While for long-term speculation, it sometimes takes a long time to get a good investment opportunity;
- As the trading time is very short, around 10 minutes per day, there is less risk of unexpected changes in the market;
- During the night, it is possible to take little or no margin, given the risks practically non-existent;
- Several trading techniques can be applied including swing trading and high probability entry systems which are very effective;
- With a good trading strategy, it is perfectly possible not to realize any losses for weeks;
- Withdrawals of winnings are quick;
- Day trading is very stimulating from a psychological point of view.
Very short-term investments, however, have some negative points that should not be overlooked:
- The amounts of the winnings are often limited. To make tangible profits, it is generally necessary to ensure a reliability of more than 50%;
- Transaction costs are much higher when the stakes are low. They can consume a large part of the profits and sometimes they constitute up to 20% of the initial capital;
- Market shifts can lead to significant losses;
- The day trader can lose much more than he wins, especially with many high probability entries;
- It is necessary to follow the courses in real time, every day. Research costs are therefore significant and, as a bonus, you have to be more available to manage trades;
- The psychological stimulation of day-trading is just an illusion. It does not save money, but on the contrary, the pressures can cause unnecessary precipitation in the trader.
In all cases, it should be noted that the choice of becoming a day-trader or invest using best online trading account uk investor depends on other points. In order to put the odds on his side, it is essential to establish strategies adapted to his objectives.