Day trading involves making two transactions on the same day: buying stock and selling it. Some investors keep their stocks overnight, for a few days or many years, but day traders always sell their stocks on the same day. Day trading benefits investors by shortening periods of risk and taking advantage of stocks that are rising to make quick profits. You minimize risks of stocks dropping sharply by never holding them overnight.
Market direction doesn’t matter because you can always find stocks that are performing well on a given day. Stocks move up and down based on human emotions, and day trading takes advantage of temporary trends to realize incremental profits. You can even make more than one trade on the same day by finding volatile stocks. The advantages of not getting attached to any particular stock include:
1. Work from Anywhere
Day traders can monitor their stocks and execute their trades through mobile devices and work full- or part-time from any location. This is only one of the advantages of starting a trading floor.
2. Eliminate Overnight Risks
Markets fluctuate up to 10 percent overnight, and many investors discover that waiting until the next day generates disasters.
3. Brokers Allow Investors to Invest More than Their Capital
Some brokers allow day traders to invest more money than the brokers hold as margins against trading losses. You earn more money than your account balance could generate on static investments.
4. Learn While You Earn
You can start small and learn successful strategies to earn small profits. Any profit multiplied by enough shares on enough days can generate substantial earnings.
5. Earn Interest on Your Cash Overnight
If you work on a 100-percent cash basis, you earn interest on your money overnight.
You can sleep well knowing exactly how much money you made. If you decide to take a day off, you can. You don’t need to follow the financial news, earnings reports and long-term prospects for particular stocks.
Change your life by freeing time, building wealth and working when you want. Day trading helps you gain experience fast because you make so many trades. You enjoy unique tax advantages and control your destiny by setting aside some money for executing day trades.