Are you looking for an exciting way to earn extra money? Consider day trading.
It’s not for everyone as it takes nerves of steel, concentration, and instantaneous decision-making. But if you enjoy risk and adrenaline rushes, and are in a position where you have some money to risk, you might enjoy it.
What is Day Trading
Day trading is the action of buying or selling financial instruments within the same trading day. It differs from other types of investing like swing trading or traditional buy-and-hold investments.
Trades can last from a few minutes to several hours. The important point is that the trade is closed out within the trading session, and is not held overnight or longer.
Day Trading Broker
A day trading broker specialises in these short-term transactions. Through the broker, you will have access to a trading platform and data feeds.
The broker makes their money by taking a small piece of each transaction in exchange for allowing you access to markets.
These brokerage firms are generally quite different from what you would use in more traditional buy-and-hold investment strategies.
What to trade
There is a wide variety of financial instruments you can trade. One of the most widely traded instruments is called forex. This stands for foreign exchange. The trader hopes to profit from short-term differences between two currencies.
For example, you can trade forex, based on the difference between the Australian dollar and the US dollar, or the US dollar and the Euro. There are many different forex pairs you can choose from.
The forex market is open and available 24/7. It is one of the largest and most actively traded markets in the world, so no matter where you live you can access this market and find sufficient volatility.
You can trade individual stocks or shares. You can trade shares of the world’s largest companies, hoping to profit from small fluctuations in price during the market day.
This is more location-dependent, so if you are in Australia, it would make more sense to buy and sell shares of Australian or other Asian companies, than deal with American or European companies
Commodities are another popular choice for day traders. Whether it’s energy, precious metals, or soft commodities like corn, wheat, sugar, cocoa and coffee. These are frequently traded as futures. With futures, you are betting on the future price of the commodity, and never take delivery of the product.
All investing involves risk. Day trading is no exception. It is probably the riskiest type of investing. You should never invest money you are not willing to lose. Don’t ever invest your home or car payment, or your life savings into any trading or investment.
Day trading should only be done after you have your other investments taken care of, and cash set aside. Think of it the same way you would gambling. You wouldn’t put your house or life savings on the line at a Gold Coast Casino.
There are few other places where you can legally make hundreds, if not thousands of dollars, in such a short space of time.