Why We’ll Never Recommend Day Trading

Daniel Penzing
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What Is Day Trading?

Modern stocks are no longer traded in the traditional way. As we know stocks can be traded online or you can have a Point of Sale Terminal Through which you can trade stocks on the Cash Counter.

So, today you don’t need to be a large corporation to make investments in stock market. Now even an individual can trade on it. This kind of chain of events was made possible due to the simplification of dealing with stocks. Being an individual investor, you won’t need to reside in the city where a stock exchange is present. Technology has made us free holders of stocks. You can make investment in the stock market from anywhere.

Huge Time Commitment

It might look like a lot of fun to watch the stock markets for short windows and be able to buy and sell stocks in fractions of a minute, but you’re missing out on what the stock market is actually for: long term investing. Instead of making quick trades to try and make a quick buck, you’re better off looking at the big picture. Take the time to choose quality stocks based on business fundamentals instead of trying to decide every few seconds whether or not to buy.

Greater Capital Requirements

While many professional investors recommend having a minimum of three months salary as an emergency fund, day traders rely on a steady cash flow to operate. There is no lack of appealing financial tools for day traders to use- margin, index futures, option contracts, off-exchange derivatives, and many more. In fact day trading strategies are so flexible that traders can exploit every one of these tools and make them a part of their contingency plan. These same tools are also available to professional investors but with much lower amounts that each trader has to maintain. Also the financial market happens to be extremely efficient, and we could all use some extra money in our pockets. Even if you don’t use them yourself, be extra cautious as you will not want an overused financial tool to have an impact on your overall portfolio.

Higher Tax Rates

With a job you get the tax benefits of a full time salary with the potential for retirement.

Working a second job means you can earn a higher salary.

If you are a filer, chances are you can ditch the accountant once you’ve done your taxes.

You Could Lose Your Shirt

For many, trading stocks is a dangerous, exciting ride fraught with danger and big risks. It’s not for the faint of heart. If it were, there would be no need for term life insurance for traders.

The financial industry has a long history of attracting the best and the brightest, individuals doggedly devoted to researching and understanding their investments. Such individuals are also fearless, often willing to bet the farm on a new idea, a new stock, or a hot streak in the market.

But sentimentality often gets in the way of making a sound decision. And there are many sound investment strategies that can be done using conservative tactics that include spending time reading reports, listening to analysts, investing in funds, etc., as opposed to trying to pick stocks.

We’ve seen professions that have attracted risk-takers, and feel that the hardest part about an investor’s education is learning how to be conservative and thinking long-term.

Conclusion

Day trading can be a fun pass time, but you should never do it. It is a big gamble and is extremely stressful to boot. Instead, use the methods described above to make money and save for a better future.

If you follow the principles laid out above, you can get yourself rich with little to no work. Stop chasing trends, stop guesses, and start following the rules.

Every day you delay, you are putting your finances at risk. Take action today and start making your dreams come true.

We’re here to help if you have any questions along the way, so do not hesitate to contact us.