Benefits of Day Trading
Day trading poses a number of benefits. This is why more and more people are getting interested in it. It actually appeals to more young people than aged ones.
As a recall to its definition, day trading is the method that involves buying and selling a futures contract within a single day without holding open long or short positions overnight. Day traders aim to make a living from trading stocks, commodities, or currencies, by making little earnings on a number of trades and capping losses on unprofitable trades. Day traders differ in duration. They can last for a couple of minutes or at times, for most of a trading session.
Day trading requires lots of knowledge, experience, and discipline to execute it successfully.
To further educate you about this type of trading, this article lets you know the benefits await you once you start day trading.
1. No Overnight Risk
The biggest benefit of day trading is that it eliminates overnight risk. You close your position before the end of the trading day because of which your profitability is not affected by good or bad news and happenings that occur during the non-trading hours. There is no overnight crises or tragedies in local or global markets that can disturb your profit for that day.
2. Can Produce Profit in any Direction
What’s good about day trading is that traders can take the advantage of the fluctuations of the market. This is not the same with long-term investors who hold their positions for a long period of time to generate profit from bull run. Day traders can short sell to produce a profit from slipping stocks.
3. Greater Leverage, Greater Power to Buy
Day trading needs low margin and gives higher leverage on your trading capital. A number of brokers give up to 100% leverage. That only means you can make trades with more amount than you really have in your account. This increased leverage can multiply your profits.
4. High Returns
Good profits can be produced if proper day trading strategy is executed with discipline. To achieve good returns you need to learn to manage the intraday ups and downs of the market to keep up.
5. Low Brokerage Commission
Brokerage commissions are one-tenth for day trading comparing to that of taking the delivery of stocks. Other charges like service tax, stamp charges, stock transaction tax are applied over brokerage only, therefore for day trading, you need to pay less commission. Choosing delivery of stocks includes an additional process of transferring stock from company to your dematerialized account which grows the cost that you pay through a brokerage. Day trading allows you to trade with more amount by paying the least commission, which is not possible with positional and long-term trading.
The mentioned benefits above add up to the knowledge you learned from the last two previous articles, which discussed the mistakes that traders should avoid and tips for novice day traders, respectively. There is so much to know about day trading. It is always important that before you jump into any type of trading, you have the adequate knowledge to win big and trade successfully.
You must be armed to the teeth with the best and most useful knowledge in trading. Visit Bworld Review to turn yourself into a sharper and wiser investor! Register an account now with BWorld and start your investment journey.