The 2 Factors To Consider If You Want To Start Day Trading

by Trading 101     Jul 16, 2019

Day-trading can be one of the most stressful jobs in the world, especially if you’re not trading with your own money and have performance quotas to meet every month. This poses the age old question: is it worth it to get into day-trading in the first place? An interesting piece of information everyone with a some trading 101 background should know is that around 80% of day traders end up in the red, which means that only around 20% are actually profitable as day-traders. Generally, the answer to the question whether it’s worth to day-trade lies in the purpose for trading. Most investment advisors would recommend to invest in secure, long-term types of opportunities.

Recently, binary options have exploded into the day-trading scene. Binary options are interesting in that they allow investors and traders to diversify their portfolios, and they have a high return to boot. Many are considering binary options as the new forex of day-trading, making day-trading a more attractive market to be in again. Let’s update your trading 101 knowledge by looking whether it’s worth to get into day-trading at this stage.

1) High risk, low reward – don’t day-trade?

Day-trading is generally fast paced and has a high time investment and knowledge requirement to be done successfully. Most people that get into day-trading as a result of visions of quick riches or other notions of success, do not have the knowledge or experience to be successful in the first place. On top of that one needs to consider that profits made from trading are taxed the same way regular income is, so a decent chunk of profits goes straight to the government every month anyway.

One of the key elements day-traders are looking out for in to make a lot of profit is the beta value of a share. This value indicates how quickly the value of a particular stock can rise or fall – so the higher the beta value is, the stock’s price could increase or drop. A high beta normally indicates a high level of volatility, meaning a high level of risk – which of course comes with a naturally high level of potential reward.

Another one that day traders always keep an eye on are penny stocks which are valued at $5 or less per share. These are far more volatile than regular stocks but can still lead to a hefty profit due to the amount of stocks being moved in single transactions. Penny stocks are notorious for requiring a lot of luck and research to make a trader any decent amount of money.

2) Using binary options – good enough to get into day-trading?

Binary options are all the rage at the moment – and for a good reason too. They’re investment tools like futures and options. Day traders use them to hold positions on stocks and its future direction. This is essentially placing a bet on whether an asset will increase or decrease in value, with traders not actually owning the asset they’re betting on, unlike in options and futures where they already own an asset they’re betting on.

Binary options offer fast returns and are rather easy to get into. Opening one is similar to placing options, with the trader needing to specify whether it’s a call or put and how long the option will be open for. Like regular options, this is a way to profit in both up and down markets. There are plenty of good and regulated platforms available for binary options trading – and they might be good enough for you to get into day-trading. Unlike regular day-trading, you can place your bet on your option and leave it and check in on in it every now and then.

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