Most people confuse day trading with real investments; however, the truth is far stranger than this fiction. Most investors, when they buy some stocks carefully look at various key things about the company.
In such cases, they would look how good company’s foundation is, how well it is performing and a lot other factors as well. These investors generally tend to invest for a longer duration, mostly for a period for at least a year or so. In such cases, the aim is to play safe and get higher returns. Now, let us look at the other side of the fact.
Day traders, usually, buy stocks and spend their most of the time tracking and analyzing the ups and down of the stocks. They won’t hold such stocks for more than couple of hours. The idea behind day trading is to invest some money on a particular stock that one think can perform well. The motive is to consistently monitor the performance of the stock and sell it at the right time, i.e. when one thinks the stock is doing really well. When one overlooks at the company’s fundamental and tend to invest only based on the performance, there may be a higher risk. In such a kind, the risk is higher, however, the return as well.
Day trading looks pretty impressive at first glance but we need to know if it really is. If we believe North American Securities Administrators Association, we can see only 11.5 percent people make actual profit in such cases. Well, the data is pretty impressive to teach us lesson that day trading will wash out nearly 9 guys out of every 10 in the market who tend to aim for day trading. Another look at the Washington Post confirms this. “About 90 percent of day traders are washed up within three months”, says a Washington Post Magazine article. So, one must be very alert when buying stock for a short period of time.