Day Trading: It's Not As Easy As It Seems

Cryptocurrency is engendering progressively greater interest from users around the globe: everyone wants to take a chance to scoop in this market. People who have little understanding of trading, seek to trade during the day. However, before you get a head-start on day trading, we offer you some important nuances. They will help you decide whether this style is suitable for you or not.

Definition

Day trading is a form of speculation in virtual currency with a view to producing a profit. This is one of the most popular styles in the crypto industry and in most traditional markets. But if you think that day trading is easy, think again. 

The golden rule: open and close all positions within the same trading day. However, buying and selling crypto in a short period of time does not make you a day trader. Intra-day trading is more than that. It's about being able to generate stable returns from short-term price movements, and that's hard work. The best proof is statistics: 80% of day traders give up during the first two years.

The Core Benefits of this Strategy

  • you can earn "quick money";
  • high level of trading activity. It's ideal for those who like to get some thrills and always stay in the market;
  • shorter drawdown periods.

Drawbacks

  • high trading costs. Each trade goes hand in hand with the payment of the spread, and sometimes the broker's commission. These costs can accumulate and reduce the total profit;
  • to start generating some revenue, you will have to understand the technical analysis of the market and spend a lot of time tracking the news;
  • day traders are very active, they tend to execute more stop-loss orders. This is where a risk of slippage comes into play;
  • it's a time-consuming process;
  • the market requires you to keep the finger on the pulse, so expensive software for monitoring the market and news services is vital;
  • you'll have to make swift decisions.

Is Day Trading Safe?

Day trading is nothing but a method of speculation on the price of digital assets. Whether this style becomes profitable or not depends on you and how you implement your trading plan. Some players are very proactive: they open and close positions within a few seconds. Others use limit orders and close positions during the trading day. 

There's always a high risk. At the same time, there are many rules of risk management, for example, the 1-percent risk rule. The essence: you prevent losses of more than 1 percent on any single trade. This method will help you to protect capital from declining significantly in unfavorable situations.

Bottom Line

We are not trying to advise you against intra-day trading, no. We want to show its true colors and warn you about the possible risks. We hope that our article will help you avoid mistakes when discovering the world of trading. Good luck!

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