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Summary
- People looking forward to making quick fortunes often consider day trading
- Not all of intraday traders end up with gains as they had expected initially
- There is a small proportion of day traders who benefit from the intraday deals
Money-making can be done in various ways as almost every asset regulated or non-regulated by a governing body has returned a substantial amount of return in a given period of time. When it comes to putting the money in stocks, the views remain divided over the preference of trading versus investing the money for a longer stretch.
People looking forward to making quick fortunes often consider the path of day trading that may include hundreds of short-time trades, the holding period may be for a few hours, minutes and it could be even seconds due to the presence of high volatility.
Investing in volatile assets like stocks always remains tricky as there are a number of factors that can affect the share price. It is not always true that investing is preferable over intraday trading, the thing is, a person should be well-equipped with the financial technicalities before riding a sizable amount of money on intraday trades.
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On the other hand, long-term investments also require a certain amount of knowledge and know-how about the shares and the operating mechanism of stock markets. The notional losses from the investment portfolio can be capped by early exit of a change in investing strategy, while the losses from intraday trades are mostly unavoidable as the market price of securities can change upside down within a duration of second to a few minutes.
Of the total intraday trades, professional market technicians and other day traders, not all of them end up with gains as they had expected earlier.
There remains a small proportion of day traders who benefit from the intraday deals as the projections and estimates deduced before investing typically become disadvantageous with multiple tweaks in the market price of a security and the price of underlying asset, in case you are trading in derivative instruments.
Several research studies have revealed that only one-tenth of the people involved in intraday trading end up gaining the expected return on the investment, while others lose either partial or major portion of their funds as the indicative price goes sideways. Of the 10% of the day traders, only one-tenth of these people somehow manage to reap profits consistently.
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The bizarre proportion says it all. Whereas, the proportion of people gaining from long-term investments is exceptionally higher as compared to the day traders.
This doesn’t imply that day trading is bad or worse. One can learn that day trading, placing hundreds of orders by yourself or through an associate of yours can be a tedious task if you are not capable of understanding the key elements of day trading. Some people devote religious time to understand and master the art of timely entry and exit into a stock in order to maximise their gains.
