Bitcoin is a booming market and people from all around the world rely on this cryptocurrency to earn that extra cash. However, there are still people who do not have much idea about this digital currency and are always in a dilemma before investing in it. For those scared souls, we have come up with this article that will define to you how bitcoins can be a real profitable investment. However, if you fear of investing a huge amount in the beginning, going for day trading is one of the most convenient options for you.
Read this article to learn about the benefits of day trading and also the risks associated with it. This detailed information will help you take the right decision. Without further add on, let’s begin!
What Day Trading Is?
Before we jump into the pros and cons of day trading, it is essential to learn what day trading is and how it works. The basic definition says that day trading is a method of purchasing and selling a bitcoin within a single day. Traders mostly uses different platforms or bitcoin trading apps but before investing make sure if it is scam or legit . These apps have millions of traders who buy and sell this digital currency at the best price.
To become a day trader, you need to stay updated about the market fluctuation. Once you know your best bet, you can earn a huge number of profits. Now let us focus on the advantages of day trading.
Pros of Day Trading You Must Not Miss
- You will get instant results
It works really quickly, so you'll see results right away. And what we exactly mean by saying results that come instantly? When a trade goes against you, you know within a few minutes whether it's due to your bad or good judgment. After you've done day trades, you can already conclude whether you're ahead or behind, right?
- No Huge Investment
Having a brokerage account that is not in the red (that is, showing a balance of $25,000 or more) is essential to day trading. Although the currency markets do not have a legal minimum capital requirement, starting with $1,000 is strongly advised. Although you can day-trade stocks for an initial capital of between $5,000 and $7,500, it's preferable to have at least $5,000 to $7,500 for day trading.
Investing over long periods of time typically involves investing in the stock market. There are no specific deliverable dates for futures trades, so they're not well suited for long-term investments. Option trades are limited as long as there are fewer established and tradable currencies as compared to stocks and ETFs.
- No Overnight Risk Involved
What you may do in your account will have been the results of what you discovered in the course of the day. For these reasons, therefore, the outcomes are immediate. Consider doing some research on swing trades. In order for the trade to catch on, the rules must be in place for a period of time before they're broken. When you day trade, you'll see big returns almost immediately; here you will see small ones and big losses as well. Due to the overnight risk, as you know, the markets will open in the morning and some people hate having uncertainty about where they will be.
Higher Return Is Possible
You can make the attempt to show how long-term returns and day trading returns differ, but it's as if you're talking about two different kinds of fruit. Investing in the long term yields better results, whereas day trading requires significant time investment to earn quick cash.
On an account with several million dollars, you will see a little impact on returns, whereas on smaller accounts you can risk little in the way of losses. Because of this, day trader/investor differences, and the profit/loss potential of day trading is much greater.
Day traders can expect to make a net profit ranging from 0.5% to 3% to one percent per day on their investment capital. This may seem small, but if it grows at a rate of 10% to 60% it could mean a return of $600 to $400 per month. As the account grows, returns are more likely to be in the 10% to 14% range or less.
Still, if you think earning quick profit is your requirement, do not miss going for day trading.