The Day Trade, an operation widely known by speculators, consists of buying and selling an asset in a same day. Thus, it comprises a very short term operation. There are advantages and disadvantages for dealing with a day trade. One of the advatanges, for instance, is to produce immediate earnings, sometimes in a matter of minutes. A disadvantage, on the other hand, is the number of orders to be sent in a short lapse of time to the broker, which can lead to high brokerage fees.
Day Trade investors use to rely on graphs and news to make profits. With graphs and charts made of “candle sticks”, they try to find market trends. Besides, as news are published, the market mood changes and dictate the day trade market moves. Many people try to make the whole process of investing in a “day trade” way more automatic, using “robotraders” to accelerate buying or selling orders, because the chances of getting a good price is higher.
Another advantage of day trade operations is that brokers do not use to ask for margins. When buying and selling assets in a same day, margins or guarantees do not apply. Also, one can either buying or selling short and leveraging. Operations can also be made by using the brokers’ accounts and paying their commissions and interests. However, even with these advantages, the investor needs to cover himself some positions, as losses can be really huge.
Another key aspect of day trade operations are the assets traded. Trading many assets can be tricky, as the investor needs to closely follow each one of them, making up to date analysis. The wiser is to operate with few assets, as it makes easier to follow News, graphs and fundamentals to each one of them. Dealing with derivatives is also risky, as they are leveraging assets. A small change in a asset pricing, let’s say 0.5%, works just like a 15-25% for a derivative in the market. Dealing in a day trade basis can head the investor to fantastic profits, but also to epic losses sometimes.
Day trade operations are usually take as highly risked operations, and are not welcomed by most investors, who consider them the easier way of burning lots of money, based on many people who have never been well succeed on that. Just like gamblers, they can start making profits and think they will keep earning, and suddenly the market turns down and losses begin to multiply. Do not hear from supposing cases of success. Dealing with day trade operations requires a deep knowledge on markets and a profound study on trends, fundamentals and companies involved.