For Those Who Want To Become Daytraders....
If you're thinking about trading stocks for a living, or even just as a side gig to earn some extra money on the weekends, then this article is for you! In "For Those Who Want To Become Daytraders...", I'll discuss the primary differences between day trading and traditional stock investing. I'll also cover what makes day traders successful and why they make more money than other investors.
I'll provide you with a list of resources to get started on your journey of becoming a day trader, as well as warning signs that should tell you when it's time to stop before it's too late. Finally, I'll share some personal insights on the ups and downs of day trading stocks for a living. By the time you finish reading this article, you should have everything you need to know to get started!
Differences Between Day Trading and Investing
It's important to first understand the differences between day trading and traditional investing. If you're familiar with both types of investing, feel free to skip this section. However, if you're new to investing or new to trading stocks for a living, then here are some key differences that exist between investors and traders:
Time Frame : The main difference between investors and day traders has to do with time frame. As a rule of thumb, day traders usually hold positions for no more than one to three days. Day traders can hold positions for longer in certain situations, but they rarely keep any positions open for longer than three days. In contrast, investors tend to hold their stocks for weeks, months and even years at a time. As a result, investors have much longer time horizons than day traders.
: The main difference between investors and day traders has to do with time frame. As a rule of thumb, day traders usually hold positions for no more than one to three days. Day traders can hold positions for longer in certain situations, but they rarely keep any positions open for longer than three days. In contrast, investors tend to hold their stocks for weeks, months and even years at a time. As a result, investors have much longer time horizons than day traders. Risk : Day traders are aggressive investors who try to make quick profits. The question is no longer Is the stock going up? but How big of a profit can I make today? This style of investing requires a high level of confidence and risk tolerance. They want to act quickly in order to get in and out quickly, before anyone else catches on and stops them from making money.
: Day traders are aggressive investors who try to make quick profits.
Conclusion: Day trading stocks for a living is an all-in investment strategy that's designed to make money quickly.
Importance Of Discipline
Many investors take the approach of, "Buy low and sell high." This is not the ideal approach to investing if you want to minimize risk and maximize returns. However, when it comes to day trading stocks for a living, discipline is of such high importance. First and foremost, there's no room for error because you only have three days to decide if you like a stock or not before you have to call your broker and start selling. Most day traders will quickly lose money if they try to be aggressive in the short term on their first few moves.