What are the Risks of Day Trading?

What are the Risks of Day Trading?

 

If you are looking for a truly risky venture for your investment dollar then you may want to investigate the roller coaster ride that many know as day trading. While those that swear by it for making and breaking fortunes will swear there is a formula those that have been raked onto the rocky shores of this particular trading business will be the first to tell you that their luck ran out. Whether it’s luck or science, day trading for many has proven to be risky business at best.

 

The Risks

 

In order to be successful in day trading you must be absolutely prepared to lose. You do not have time to think about failure, as it is likely at any moment. This is a lightening quick business and sometimes the market moves much more quickly than your fingers. This can result in unexpected losses as well as unexpected gains along the way. These bumps in the road are nothing compared to the highs and lows of actually being a day trader though. Forget the finances for a moment and consider the risks of heart attacks, heart palpitations, and strokes brought on the by excitement and heartburn (not that this can bring about a stroke but it sounded good) of the moment.

 

Day trading is very taxing. You must constantly watch your computer throughout the day for signs of life from your stock and act immediately. This is a high stress job that many simply cannot handle long term. Unfortunately day trading must become your day job because you have little time or energy to invest in anything else. There are those that get a huge charge from day trading but this is not a job for the average citizen it takes a huge toll on their health much too quickly-especially those that are sensitive to stress as it is.

 

Perhaps the biggest risk is that you can become addicted to the highs and lows. This is a huge problem because once you become addicted it is much more difficult to temper your purchases and counter your losses. When you aren’t looking at it with a clear mind and unhampered perspective it doesn’t seem nearly as dangerous as it can be. Lives are ruined financially because of irresponsible day trading and addictions to day trading that are much like addictions to gambling. If you suspect you or someone you love is the victim of this particular addiction please get him or her or yourself the help that is needed as quickly as possible.

 

You should also understand that day trading isn’t investing in the strictest sense of the world. Day traders don’t invest in stocks so much as they trade stocks and while some may claim this is a simple case of semantics there are a few major differences. Investors hold onto stocks for a little while with the expectation of gains over time while traders buy and sell quickly hoping for immediate gratification. Investors research and study a specific stock before jumping in while traders study patterns and formulas and hope they made the right decision.

 

Investing in and of itself is risky; day trading adds another layer of risk to the equation. If you think you have what it takes to participate in day trading you need to keep in mind that you should make sure that you have a few other options in place for your investment future that require a little less risk.