While day trading online has made many people some good money, it has also left many investors very much out of pocket! The problem is that because many traders are fooled into thinking that it’s very simple, they don’t really know what they are doing when it comes to day trading stock online and they don’t really understand the risks involved. In fact, day trading online is not too far off from gambling, the only difference being is that you are not drinking all the way through it. Here are some of the main disadvantages of day trading online:
1. Commissions. When you make a number of different trades every day, you have to pay your broker a commission for every trade that you make. Even when you are dealing with a discount broker, these fees quickly add up. So, in order to make any significant profit on day trading online, you have to factor these commissions into your gains. If you have a long-term trading strategy, however, fees and commissions are much less of a problem.
2. Difficult to Predict. Predictability also becomes an issue when you are dealing with such a small period of time. A number of experts actually say that you cannot predict the turns the market could take on a short-term basis. The most successful strategies on the stock market are those that are more long-term. When trying to make a small profit based on daily market fluctuations, what will happen can be extremely hard to predict.
3. Fast-Moving. Day trading stock online is very fast-paced. You have to be in the right place at the right time all the time in order to be successful at it. Even a couple of minutes difference can end up being huge in terms of the money you make. This turns into an even bigger problem when you have to deal with a broker. When your trade is placed, it may take several seconds or even minutes for it to go into the market. So, when such a delay occurs, it could cost you money.
4. Time-Consuming. If you decide to get involved with day trading stock online, you will need a lot of time. Some people seem to get the impression that they just need a few minutes a day to look at some charts, which will end up making them a lot of profit. However, this is not the case at all. If you really want to make money from day trading, you have to put time into it. First, you will have to learn exactly how to do it, and you must always have internet access during market hours. If you have a full time job, this can be virtually impossible.
For more information on day trading, go to:
en.wikipedia.org
