When it comes to stock trading, there are a lot of investors usually involved in this type of business. With many different trading strategies available, different investors will also prefer using different approaches when trading.
Currently, there are two commonly preferred trading styles, day trading and long term or positional trading which usually involves holding your stock for a long period of time.
However, most traders seem to be in love with intra-day trading and below might be some of the reasons why. See more information on day trading here https://tradingreview.net/
No Stressful nights
Personally, I think this is the main advantage of day trading, it has no overnight risk. You can be able to close your position even before the trading day ends. This way, you will be safe since you cannot be affected by anything that might happen at night when there’s no trade going on.
This always gives the positional trader a bit of headache as any bad news in the market can result to your profits disappearing just like that. But as for those practicing day trading, you will have nothing to worry about as nothing will affect your profit for that day, not even an overnight tragedy in the local markets.
Well, people join stock trading to make profits, right? However, it is only those who practice day trading can be able to make it in any way the market goes.
In other words, they can be able to profit from either a rising or falling market. This is usually not possible for the positional traders or the long-term investors who are waiting to make their profit from a bull run.
For the day traders, you can always engage in short selling thus making some profit from the falling stocks. On the other hand, the long-term investors will only be able to practice short selling but only in those futures that requires a high margin. Click here to see how day traders usually go about their business.
If you want a trading style that will require low margins but provides a great leverage on what you invested, that would be day trading.
A lot of brokers will usually provide up to a hundred percent leverage on this. What this means is that you can be able to trade even if you have a less amount in your account depending on the broker you are working with.
Well, with an increased leverage, you can certainly increase your profits too. This benefit cannot be enjoyed by positional investors as they need to have huge capital in order to make a good profit.
If you look at those who have been practicing day trading and implementing it with great discipline, you will notice that they have a good profit trend. If you want to make high profits in day trading, you will have to understand and learn how you can be able to handle any fluctuations in the market. This way, you will always know what to do at what time.
Low broker commission
For the day traders, they usually pay low brokerage commission compared to that of taking the stock delivery. The other charges like stamp, stock transaction tax and service tax among others are always applied when using a brokerage.
This is why the commissions are low for the day traders compared to their positional counterparts. Taking stock delivery usually involves some extra process of stock transfer to your demat account from the company.
This is what usually causes an increase in what you are going to be charged through brokerage. Day traders are able to trade with a huge amount but will pay less commission thus benefiting more compared to the long-term traders.
You have some cash always
With this trading approach, you will always have some cash with you. It is that simple, you start your day with some cash and at the end of the day you will also have some cash.
This way, you will be able to have a goodnight sleep with nothing to worry your mind. I mean, it’s always a nice feeling going to sleep with fat pockets, right? Additionally, with day trading, you can be able to withdraw your money at any given time in case of an emergency. Unfortunately, for the positional investors, you will need to first sell the stock then cash it later.