Day trading: does this investment tactic really works?
Day trading is one of the most controversial investment tactics that exist. What is day trading? Does it really work? Check out now!
When we talk about gaining money with investments or stocks, there are a lot of options that a person can choose from. You can invest in regular stocks, and real estate, you can invest short, commodities, and the list goes on.
One of the most famous categories, however, are those involving day trading. This modality got particularly known when a lot of people went on the internet and declared they have gained thousands or even tens of thousands in cash overnight with day trading.
However, the day trading community suffered a severe backlash because many people said that, despite winning money overnight, they lost all their money.
Some people even begin to create debts and take credit so they could invest more and more, in order to try to break even.
The worst part, some people claimed that they lost relatives to suicide, after losing everything trying to be rich.
What is day trading?
Any kind of financial activity, like a stock or a commodity, has a price oscillation. If you are a buy-and-hold kind of investor, like Warren Buffet or Peter Lynch, you are more worried about these price changes during a year, or a month.
What many people don’t know is that these prices change all day long, having maximums and minimums.
For example, the certain stock is worth US$ 9.00 in the morning, at noon it peaked US$ 9.50, and at the end of the day, its worth is US$ 8.90.
A day trader is a person that tries to predict and identify these kinds of oscillations.
Theoretically, one experienced player would be able to identify these oscillations, he could, let’s say, invest US$ 9.000 at the beginning of the day and cash out right after it peaked, gaining 500 hundred dollars in a few hours.
That’s basically what a day trader is, a regular stock market investor, whose work is done in much lower time spam. He can become rich or poor in a 24-hour day, while other people may take months or even years on these results.
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Does someone get rich by day-trading?
If you make this same question on Google, you will find out a lot of websites regarding people who allegedly got rich by simple day-trading.
However, it is also true that many of these so-called “successful traders” turn out to be scammers.
For the sake of not accusing or praising someone who does not deserve it, no name will be presented here. Perhaps someone can really get rich by pure day trading, but, as seen during history, these ones are really rare.
After all, is it worth it to invest in day trading?
As said before, day trading is indeed a practice (and is completely legal, for those who are still wondering). Theoretically, a person can indeed become incredibly rich in such short time spam.
However, when it comes to practice, we see that the number of people who fail is far higher than those who succeed, and it all comes down to a simple sentence: high risk, high reward.
You see, it is already very difficult to predict the outcome of a company even with the amazing number of indicators and longer time spam. It is much harder to predict this behavior in a shorter time span.
The conclusion is: if you want to test day trading, the suggestion is: to spend only the money that will not be missed if you lose it all.
You need to treat your day trading money like you treat the money you use to buy a lottery ticket.
There may be people who exclusively do day trades, but no doubt they work and study a lot, and results don’t come overnight.
In the end, there is no such thing as easy money.
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