Special Advantages of Day Trading: Here are 10 Points

by Elite Investment Advisory Services Investment Advisor

How do you tackle the Intraday markets? In intraday trading, different traders adopt different styles. However, there are many advantages of Intraday or day trading over positional trading which involves holding the stock for certain period. In Intraday trading the trader can purchase stocks without paying for the full value of stocks hence most of the traders prefer Intraday trading tips . In this article 10 special advantages of day trading is explained:-

1. No overnight risk

One of the advantages of day trading is that a trader having zero overnight risk. One can close his position prior to the end of the trading session thereby his profitability is not affected by the market impacts such as current news, overnight crisis, events or tragedies that may take place in the market.

2. Day traders can make profit anyway

Whether the market rising or falling, it does not matter for day traders. This is not the case with long term investors holding their stocks for long period in order to make profit from bull run. Intraday traders can make short selling to get profit from falling stocks, but positional traders can make short selling only in futures which involves high margin.

3. Bigger Leverage more buying power

Day trading provides greater leverage and it requires low margin on your trading capital. However, most brokers provide up to 100% leverage. It means that you can trade with more amount than you actually have in your account. The increased leverage can increase your profits, whereas positional traders don’t have this benefit and they have to have high level of investment to make considerable profit.

4. High Returns

If you exercise a proper trading strategy, you can acquire good profit. To derive good returns from your trade, you have to learn to deal with the intraday fluctuations of the market to keep up.

5. Less brokerage commission

Brokerage commissions are less. Also, other charges such as service tax, stamp charges, stock transaction tax etc are applied over brokerage only, hence for intraday trading you have to pay very less commission. With day trading you can trade with more amount by paying the smallest amount of commission, but it is not possible with positional and long term trading.

6. You are in cash at the beginning and end of day

In intraday trading you can square off all your position prior to the close of market. Moreover, you can withdraw your cash at any time in case of any crisis, but positional traders don’t have this advantage since they cannot withdraw their money immediately. They have to sell the stocks first to get the cash.

7. Less Risky

By adopting proper money management and discipline, you can lessen your risk. Loses can be too much extent in positional trading as anything can take place overnight and your stock can crash next opening of market day without even getting suitable exit levels. Your loses are limited in intraday trading.

8. You can do more trades

Day trading allows you more opportunities, whereas in positional trade you have to wait for certain short or long period for your targets or stop loss levels to set off so that you can make exit. In day trading you have more leverage thus you can do more trades. You have more buying control in day trade and can use more opportunities.

9. Better learning opportunities

In Intraday trading you get more opportunity to learn, test and apply different trading techniques in a short time span of time. You can decide as to which strategy fitting for you and which chart patterns gives better results.

10. Don’t have to do much study

Whatever be your stock preference, whether to buy stocks for short or long time period, you have to do more study/research to select the right stock.

You have to learn its fundamentals and technical thoroughly. However, most of the traders only trade in few selected high volume stocks everyday and generate decent profit without even applying any strong technical or fundamental study of that stock.