Day trading is something completely different than investing. A day trader buys and holds stock for small time intervals that last from a few minutes to a day or two. An investor buys stock and holds it for much longer. Day traders intent to make money from small fluctuations in stock prices.
There have been parallels been made between day trading and gambling. The truth is that the two don't have many similarities. A day trader must base his actions on specific data and analysis before a stock purchase and sale is made. Luck doesn't play a role in the decision making process of either the investor or the day trader.
Stock prices fluctuate constantly. Depending on how many people buy or sell a stock then the price changes. Day traders rely on this fact to make money. When a day trader has information that says a stock price will rise in the near future they will make a purchase and hold until right before the prices starts dropping again. It is these daily small fluctuations that the day trader depends on to make a profit.
All day traders capitalize on the small daily stock movements by trading large numbers of stock. This volatility that is actually what day traders rely on to make money is also what determines their losses. Stocks don't always fluctuate upward and as a result day trading is a risky business.
If you are thinking about playing some money in the stock market then you should be aware of the potential risks. You wont become an investor or a day trader overnight. The idea that practice makes perfect applies to both investing and day trading.
The biggest difference between a day trader and an investor has to do with time. Investors generally hold stock and assets much longer than the average day trader. Overall there is no consensus on which of the two methods generates the most returns.
Whether you are thinking of becoming an investor or a day trader you should take some time and learn about the techniques involved. In the end if you decide to take your money into your own hands you should be able to make the right decisions about investing.
There have been parallels been made between day trading and gambling. The truth is that the two don't have many similarities. A day trader must base his actions on specific data and analysis before a stock purchase and sale is made. Luck doesn't play a role in the decision making process of either the investor or the day trader.
Stock prices fluctuate constantly. Depending on how many people buy or sell a stock then the price changes. Day traders rely on this fact to make money. When a day trader has information that says a stock price will rise in the near future they will make a purchase and hold until right before the prices starts dropping again. It is these daily small fluctuations that the day trader depends on to make a profit.
All day traders capitalize on the small daily stock movements by trading large numbers of stock. This volatility that is actually what day traders rely on to make money is also what determines their losses. Stocks don't always fluctuate upward and as a result day trading is a risky business.
If you are thinking about playing some money in the stock market then you should be aware of the potential risks. You wont become an investor or a day trader overnight. The idea that practice makes perfect applies to both investing and day trading.
The biggest difference between a day trader and an investor has to do with time. Investors generally hold stock and assets much longer than the average day trader. Overall there is no consensus on which of the two methods generates the most returns.
Whether you are thinking of becoming an investor or a day trader you should take some time and learn about the techniques involved. In the end if you decide to take your money into your own hands you should be able to make the right decisions about investing.
About the Author:
The best thing you can do before you begin investing is to speak to an Investment Adviser. You need to locate someone in your area though. If you live in Toronto then you should locate an Investment Adviser Toronto.
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