Those who invest in worldwide stock markets will have come across day traders on a regular basis whether directly or indirectly. The general consensus amongst some people seems to be that day traders are gamblers who take undue risks for relatively short-term profits. It is easy to see why some people may assume this but day traders are not necessarily gamblers and often use a very structured approach to their investment strategies. Read full article
Day traders and HFT automated systems provide a great deal of liquidity to the markets. Any individual investor or trader who decides to take up day trading or otherwise make very frequent transactions in the markets should be aware of the risks - high transaction costs, taxes, possible frequent realized losses that can eat away principal, etc.
The term daytrading is often portrayed as exciting and an easy way to make money. However, this could not be further from the truth and those looking at becoming day traders need to go in with their eyes open. If you do your research and get your timing right there is the potential to make significant short-term gains. However, while maximising your profits you also need to minimise your losses.
