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Day trading

Day trading

Day trading is the execution of trading operations within one day without transferring positions to the next day. Many novice traders choose this method, as it looks simpler outwardly - open an order with a small lot and close it as soon as possible. But this is easier only at first glance. In fact, there are many nuances that speak for and against intraday trading.

Is it easier or more difficult to trade within one day? This is a question with no clear answer. But here it will be appropriate to cite the following fact. Even 10 years ago, day trading was mainly carried out by banks and investment companies, private traders began to massively come to this market after the development of programs with advisors, indicators and other auxiliary capabilities. Therefore, this is not such an easy task.

ADVANTAGES OF DAY TRADING

Day trading has many advantages over opening orders for several days.

  • Quick profit. A day trader can manage to complete several profitable trades in the time that his more patient colleague spends on one. For example, the price has changed by 100 points in three days, changing direction several times. If during this time several deals were opened at the price peaks up and down, then the profit will be significantly greater than from one order. However, the picture is the same with losses.
  • Relative psychological comfort for many people. The day trader opened an order and soon found out the result. This is often important, as leaving a deal overnight can be sleep-depriving for some.
  • Short periods of drawdown. A downturn in day trading tends to come out faster than long-term trading.
  • Comparative ease of decision making. Of course, nothing is completely simple in trading, but still, opening long positions requires a deeper analysis and taking into account more factors.

CONS OF DAY TRADING

Along with the positive aspects, day trading has many negative aspects, and it is not good for everyone, even from a psychological point of view.

  • The presence of "noise" on small timeframes. The presence of many false signals makes it difficult to correctly determine the entry and exit points of transactions. On higher timeframes, the trend is seen more clearly and the situation is clearer.
  • Increased trading costs. The more deals are opened, the higher they are, especially if the broker charges a commission for each transaction performed.
  • Increased time costs. Day trading is hardly suitable for those who spend an 8-hour day at their place of work. Trying to trade during lunch breaks and at night, tired and not getting enough sleep is a bad idea. Opening orders within one day is really time consuming.
  • Increased stress for many people. We wrote above that it is psychologically easier for some traders to find out the results quickly and sleep peacefully at night. But there are also people who are opposite in character and temperament. It is better for them to look into the terminal in the morning and in the evening than to sit next to it on pins and needles for hours on end.

Thus, day trading is not suitable for everyone and not in every situation. However, no one prevents a person from opening short and long positions at the same time. In any case, trading success mainly depends on the level of preparation, the chosen strategy and strict adherence to the plan. And without these components, the mere fact of choosing a time frame for trading will not bring profit.

12.10.2020
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