Daytrading is considered the “supreme discipline” of stock market trading, as it involves a particularly high risk of loss. The basic principle behind the day trading is very simple: positions are opened and closed within one day. It is not intended to hold a position after the close of trading, which means that traders can also avoid the overnight fees. Since orders are opened and closed not only during one day, but also in some cases within a few minutes or hours, the daytrading partly blends into the scalping, exploiting short market fluctuations of a few minutes. If you too want to gain experience in day trading, then here you will find everything you need to know about the risky trading model.
Advantages and disadvantages of day trading in detail
Before deciding to pursue a career as a day trader, one should perhaps first of all deal with the advantages and disadvantages of this trading model. Once you have mastered the daytrading, you can benefit from several advantages:
- Low startup costs
- Free timing of forex trading
- High profits
It proves to be advantageous that only a small starting capital is necessary in order to be able to start with the daytrading. With 500 euros you are usually well served – but it is also possible to start with only 100 euros. Of course, it should be noted that a small deposit means a low trading volume and thus low profits – especially for beginners and / or for traders with small capital. The low start-up costs are a significant advantage.
Daytrading can be attractive
Also the free timing is one of the factors that speak for the daytrading. Of course, this free time allocation applies primarily to forex trading, since all other markets are accompanied by a market close. Although this is also the case with foreign exchange trading – due to the time lag and the associated opening hours of the stock exchanges, traders are able to trade on Asian or Australian stock exchanges during the night or early morning hours and to trade in Europe or the US during the day. Regardless of what one is engaged in all day long, one can therefore, in any case, pursue the daytrading nearly at any time.
High profits are relatively relative to day trading. After all, we have already stated that day trading can be pursued with low stakes and thus also able to generate low profits. As a positive it turns out, however, that as a day trader usually works permanently on the PC and thus can use every possible entry point. With a correspondingly high leverage, it is also possible to achieve high profits – but you must not underestimate the corresponding risk of loss.