What is Intraday Trading?
When a trader buys and sells financial securities within a single trading session it is known as day trading. Day traders do not keep any trade position open even overnight. Therefore, they can lose the invested money in a short period of time if the market goes against them. It is the trading style that follows the absolute rule of the higher the risk, the higher the reward.
Day Trading – Smart or Stupid Choice
Intraday trading gets an excessive amount of hype that allure a lot of individuals. 9 to 5 working professionals can also get influenced with the day trading. They can choose day trading for part-time income.
As there is high potential for making profits, it also involves high risk to lose your money within seconds. Therefore, a question arises that day trading is a smart or stupid choice for salaried persons.
- Day trading is not just about being familiar with the stock market and investing a few hours daily for some days in the stock market. It will be like gambling if you are a novice in the stock market and can be proved a point of falling for you. On the other hand, if you have invested enough time in the stock market, and then started day trading with informative decisions, it will be an opportunity to make a part-time income
- Another factor is that your income size allows you to take risk or not and if yes, then how much. Day traders invest a huge amount of money, but it is the amount that they can keep at risk and afford to lose. It is going to be risk capital for them. It may surprise you, but day traders need enough funds to capitalize effectively on short term price movements. It may hard to invest a huge amount of money at once for salaried persons
- You may underperform in your job if you are devoting a lot of time to research the stock market. Thus, it is important to maintain both the things equally and with discipline
- The professionals know their stuff exactly as they are experts in the markets. Typically, they are well-established individuals and can bear the loss if the market goes on the opposite side of their decision. A salaried person involved in day trading as a part-time job may not be able to find out short term price fluctuations in the stock market and may bear losses if they trade wrongly
- You need to align the market information and your strengths to develop a personal trading style. There is a need to understand and choose the best day trading strategies for convenient trading
- To increase the odds of your success in day trading online, you really need to understand the technical analysis of the stock market. You cannot avoid market trends as a day trader. There are some indicators as well that you need to read the market conditions
- One thing is that trading commissions can swallow all your profit from day trading online. And other is taxes. Day trading is about short-term capital gains that are taxed high by the government. It is a large problem if you are employed and involved in day trading because with the day trading profits, you can fall into a higher tax bracket. Demat transaction charges also need to be considered
The Bottom Line
Day traders need to develop a very disciplined strategy and stick to it to take a position and exit a position. As a part-time trader, you can trade just a few stocks each day with calculative risk only. It will make you smart to involve in day trading. Thus, start small and be disciplined so that you are called a smart part-time day trader.