Excerpt: Learn the advantages and disadvantages of technical analysis day trading with Forex4you’s beginners guide.
Day trading is the term which is used in the context of the forex market. It refers to act of buying and selling the forex pair same day by the person doing trading. Hence in case of day trading, there is no open position left as far as a trader is concerned. Let’s look at some of the pros and cons of technical analysis day trading.
Pros of day trading
Take benefits of the volatile market:
While trading in intra-day, active forex traders can make a huge profit during the volatile market conditions. Any economic factor or the industry related news can have an immediate impact on the forex pair which brings in massive ups and downs. In such a situation, traders can follow the trend and spot their trade accordingly to earn a decent profit within a few hours.
Do not need to block the funds for long period
To trade safe side you need to invest your funds for medium to long term. But in case of day trading, the trader often doesn’t require to engage their money for more than a day time which provides them with a higher level of liquidity to make frequent trades.
Day trading can be taken up as full-time employment
Considering the amount of profit and that too the period in which it has been earned, it often interest the forex traders to take-up day trading as full-time employment. It makes you the boss of your own decision providing a handful of opportunities to meet out the day to day financial requirement and make money.
Cons of day trading
Traders gets addicted
Once you lose all your money you wish to get it back, and it’s then when you invest again where is always a possibility of losing it again. That means many a time day trading becomes a trap where the trader gets addicted to gambling with the only goal to recover its losses.
No fixed income
Traders who choose day trading as their full-time work often miss to consider the variable or no-income factor. There are no guaranteed returns, and forex traders end up paying from its pockets. It also leads to highly mental stress conditions among traders.
There is excessive risk involved in day trading. The trader might undergo substantial losses which are mostly overlooked at the period of taking an investment decision. The risk also emerges when day trader trades casually without analyzing the potential profit positions and other key market factors.