Advantages and Disadvantages in Day Trading
Day trading is the definition when the transaction of buying and selling of share is performed within that same day. More and more people resort to day trading nowadays because it is very accessible especially with the advent of the internet. Online trading can be done in the comforts of your own home with the aid of a computer and an Internet connection. In the succeeding paragraphs we would know the advantages and disadvantages of day trading and why more people resort to this type of trading.
There are basically three styles of day trading and these are day trading, swing trading and trend trading. Day trading is a popular choice among many especially casual traders (online traders). Why? One advantage of day trading is that it has no overnight exposure. It is a known fact among traders that there is high risk overnight which will result to high losses of capital. Day trading also allows more opportunities for the traders since they move quickly, thus they may acquire more profit opportunities.
One example of disadvantage when it comes to day trading is the higher transaction costs. Since transactions are achieved quickly, a day trader is faced with more time to look for other opportunities which entails another transaction fee. More transactions in a day would imply more transaction costs. Another disadvantage also is the longer use of resources like the internet and computer. It would mean your computer would be open for a long time and you would be sitting in front of your monitor for a longer time as well.
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Given these disadvantages why do people still resort to day trading? The most popular reason would be because day trading is like gambling, people get the same high along with it. Day trading from the financial experts is also a classic example of get rich quickly mentality which is a very attractive reason to engage your money in day trading.
These are just some of the known basic advantages and disadvantages of day trading.
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