Day trading is a profession which takes a lot of money to achieve. The difference between a day trader and other traders lies in their level of knowledge in investment markets. Most traders are beginners who just enjoy the process of trading because of the high return they are able to achieve.
With a minimum knowledge of stock market trading, you can make an average return of about 30%. Day traders who have some trading experience and a little bit of expertise, can earn well over 90%.
Investing is a very time consuming process. Most skilled traders are only able to get the first 2-3% of the profits on the day they buy their shares. This can put a large financial strain on families and individual members.
What are some of the financial challenges involved in trading stocks?
Unlike stocks where you can buy and sell shares at any price, the investment markets can only go up or down, they cannot go up forever.
It also creates an interesting problem called ‘negative frequency trading’. Traders who trade on negative stocks tend to be short-term investors and buy low and sell high. This means their losses are not covered by their profits and, because they often put more emphasis on price, rather than earnings, their returns fall out of the average returns of the markets. Some of the problems and challenges which come with negative frequency trading is that short-term traders only have one chance to buy or sell stock, so they must be risk averse.
A lot of traders who trade on negative stocks, are people living in lower income bracket. However, since it is difficult for the average trader to trade on negative stocks at first, they will eventually get started by trading on a higher-value asset class like equities or bonds.
Some traders may even consider it to be an unhealthy trend which is causing these long term investors to turn off their trading accounts after a while and not buying more at times. Most day traders get the price of their stock up, at the end of the trading day they simply try to sell the stock for a profit. When their profits are up they sell more stock and keep trading the stock till the next trading day.
The next day, their returns are now lower. Not only do they not break even, but they lose money on every trade. The traders at the upper end of the market, who make money by buying at the top of the market, are often doing this to try and improve their profits from previous days. This usually gets them into
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