The Top Reasons to Consider Day Trading
If you want to capitalise on the lucrative forex market (which sees an estimated $6.6 trillion traded globally every single day), you may want to consider a career as a day trader.
This is definitely the most lucrative career option for aspiring forex traders, as it provides an opportunity for all active investors who execute intraday strategies and profit from short-term price fluctuations and volatility that occurs within a matter of minutes or hours.
This technique employs a wide range of strategies to optimise profitability, enabling you to tailor your efforts to suit your budget and expectations. But what are the top reasons to consider day trading in the digital age?
What are the Pros of Day Trading?
One of the most obvious advantages of day trading is the potential profit margins, especially when you deal in volatile markets such as the foreign exchange.
After all, this market sees various price movements during wach 24-hour trading session, while the derivative nature of forex means that it’s possible to profit through speculation and without assuming ownership of an underlying financial instrument.
In this respect, you can also access inflated leverage as a day trader and benefit from increased positions, which may in turn translate into an optimal profit that’s far in excess of your initial deposit.
While such a career path can also provide you with genuine freedom as an investor, you may be best served by initially working for a proprietary trading firm as a contractor. Although this rewards you with a share of any garnered profits rather than a fixed salary, it allows you access to capital and removes any of the initial barriers to entry that may exist.
For example, independent day traders who work from home may face a minimum equity requirement of $25,000, and this is arguably something that you’ll have to work towards over an extended period of time.
Stocks, Forex and How to Make it as a Day Trader
If you do choose to operate independently, you can minimise your capital requirements and exposure by targeting markets such as the foreign exchange.
In this instance, accounts can be opened for as little as £100, and with the aforementioned leverage, a relatively large amount of capital can be invested and controlled with this small holding.
The forex market also increases your flexibility as it’s open 24 hours a day, creating an affordable and viable option to aspiring day traders across the board.
Conversely, day trading stocks represent one of the most capital-intensive arenas within the financial marketplace, with the minimum equity requirement far higher in this niche (as we touched on earlier in the piece).
If your account falls below this minimum, you won’t be able to day trade until the minimum equity level is restored, so this is scarcely viable unless you have enough capital in the bank.
On a final note, you should consider using an online demo account before committing your capital for real as a day trader. This will enable you to experiment with alternative asset classes and hone your theoretical strategies, as you look to minimise risk and optimise your gains over time.
This is excellent preparation for a career as a day trader, although it can’t completely offset the risks or inherent volatility involved.