Day trading is no longer a new concept, but it is one that has opened the doors for individual investors and business owners to enter the trading market and reap significant rewards. This is not a game for the faint-hearted, but if you’re willing to put the time in, day trading could add a portfolio of investment gains to your small business.
Making the most of small price changes can be a very lucrative business. It requires diligence, focus, and commitment to get educated in the procedures and can be a huge investment of time, however, there are several benefits if you’re well researched.
What Are the Benefits?
There are many ways to make the most of day trading, including first and foremost avoiding overnight risk. While the market is closed, the risk is an unknown factor and can be heavily affected by economic or political moves, or even rumours. Another benefit is efficiency, you can turn around a day trade in less than 15 minutes, making it a satisfying, albeit perhaps nail-biting way to trade. As a small business owner, is this a suitable option in terms of the time you can commit? The pace of trading requires investors to have their eye on their strategy at all times while in play and have a solid understanding of investments.
From a tax perspective, there is no tax set on day trading and no definitive prescription on how a day trader should tax their profits. This can change day to day, even when changing in the same market.
Another benefit is the multitude of ways to access a range of trading strategies, as seen with the rise of different type of speculation on the stock market. Spread betting offers a huge range of markets, and also allows you to trade on the speculative stock in a huge range of markets, without having to invest in an underlying asset. As opportunities in spread betting continue to become more refined, it is surely a sign of things to come, an open door to new investors.
So, is it Worth it?
Successful day trading involves cutting trade losses quickly to focus on profitable trades, as long as you’re prepared to embrace this. Low win rates are common, but there is the potential of a higher risk-to-reward rate for the trades that come good.
If you’re considering entering into day trading, it’s worth considering all trading strategies available to you, including swing trading. This, differently to day trading, allows for trades to be made in stocks, currencies, and commodities over several days or weeks, balancing out some risk associated with trades in a day. This strategy alleviates the necessity of research, analysis, and tracking required with day training, and due to the need to sit with trades for longer, often takes up less time day-to-day.
What it comes down to, at the end of the day, is choosing a trading strategy that will fit around your personality, interests, and lifestyle – as a small business owner, where does your passion lie, and what does your time allow?