The day trader?s main objective is to trade expensive and unstable stocks on the NASDAQ and NYSE markets in the amounts of 1000 shares or more, and make money from the smaller intra-day price movement.
The day trader may make many trades in one day, holding onto stocks for only a few minutes (or hours), and almost never overnight. Day traders are short-term price speculators. They?re not investors, and they?re not gamblers.
Day trading just isn?t investing. The day trader?s time period of analysis is rather brief: one day. Their only intent is to exploit the stock?s intra-day value swings or day-to-day price volatility. In contrast to stock investors, day traders do not seek long-term value appreciation.
Stock volatility is typically a rule of the market rather than an exception. Most stock rates move up or down in any given day on account of various external factors.
Even if the market is fairly calm, there are usually stocks that are volatile. Day traders try to identify a stock that has a trend and then go with that trend. ?Trend is really a friend? is a common motto among day traders.
Day traders try to pick up a relatively little stock movement, 1/8 or more on that share. If day traders are trading a huge block of shares (that is, 1000 shares per trade), then day traders may profit $125 from a 1/8 price movement.
Alternatively, if a day trader received 1000 shares and the trader was wrong, which also happens, then the day trader will lose $125 from a 1/8 price movement. Volatility is a double-edged sword.
For pricey stocks that trade for $100 or more, a 1/8 or 13 cents movement is such a tiny relative value change that it occurs all the time. Consequently there are lots of day trading opportunities.
It isn?t common to see a day trader performing many, sometimes as many as 100, trades within a day. Alternatively, an investor?s time frame is a lot longer. Investors seek a much larger price movement than 1/8 to earn the ideal rate of return. That takes some time.
In short, day traders seek to extract an earnings from intra-day value volatility by trading the stock often, whilst the investors seek a long-term capital appreciation.
If you?re in need of instant business capital and are interested in putting your capital into the stock market, success does not happen overnight.
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Source: http://niftyoptionswala.com/day-trading-versus-long-term-investing-find-out-whats-better-for-you/
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