What is day trading?

Before investing in the market, you need to understand what is Day Trade. This is one of the strategies used by shareholders to trade on the stock exchange. The procedure is recognized for its agility and speed, ideal for short-term investments. Check it out below. 

What is Day Trade?

The stock market is becoming more and more popular among Brazilians, especially those who want to increase their profits. There are various methods and strategies for investing in this market, one of which is Day Trade. 

Day traders are shareholders who follow the market throughout the day in search of the best short-term investment options. They usually buy and sell their shares on the same day. 

Most investors have doubts about what is Day Trade. As the name suggests, these are stocks that start and finish on the same day. The income from this strategy is variable, but it's the best option for those aiming for short-term profits. 

As soon as traders buy one of the shares, they sell it on the same day. In other words, in this type of strategy, shareholders don't need to do anything other than study the shares, invest in the best alternatives and sell them on the same day to other interested parties. 

Day trades can be made on any asset being traded on the stock exchange. The best options are shares, real estate funds, ETFs and any other contract.

The main difference between these trades is that they start and end on the same day. Traders seek to take advantage of the movements and variations in daily prices, making profits from one-off opportunities. 

Although it seems like a simple and easy strategy, day trading is extremely risky. What's more, they can cause losses for shareholders. After all, as it is a short-term operation, it is done irrationally. 

How this strategy works

First of all, it's important to understand how the Day Trade strategy works. In general terms, shareholders buy and sell shares in a single day, which is a bit risky. See below:

• Buy Followed by Sell: In this type of operation, an investor buys a lot of shares at 10:00 a.m. worth R $10.00. At 12 noon, the shareholder sells each share for R $12.00; 

• Sale Followed by Purchase: In this type of operation, investors sell a lot of shares at 11:00 a.m. for R $11.00 each. At 3pm, they buy these shares for R$10.00. 

Who can become a Day Trader

Today, there are several online platforms and brokers for buying and selling shares. In this sense, anyone can become a Day Trader. However, in order to be more successful in the market, you need to understand it. 

Shareholders don't need any training or certification to become a Day Trader. However, in order to avoid major losses during trading, it is necessary to understand the dynamics of the financial market. 

In this sense, if you're not very familiar with this type of operation, a great tip is to start slowly. In addition, shareholders need to understand all the rules of the game, so it's a good idea to study up. 

What are the advantages of Day Trade?

Now that you know the main concepts of Day Trade, it's time to understand its advantages. Check them out below:

• Leverage: Investors can start investing in Day Trade even if they don't have a lot of profits to start with. However, to avoid risks, it is essential to establish a guarantee. In this sense, it is enough to pay for losses or receive the profit; 

• Agility: Since this is a single-day operation, day traders can take advantage of the fluctuations that occur in the market. In this way, profits will be made more quickly; 

• It's possible to gain from a fall: In addition to shareholders gaining from the rise in value of shares, it's also possible to gain from a fall. In other words, as soon as you buy a share, you can sell it and buy it at a lower price;

• Liquidity: By investing in Day Tarde, shareholders can be sure that the profits from operations will be available for "withdrawal" after 24 hours; 

• Loss control: Shareholders are able to program the sale of shares automatically in Day Trade, especially if they fall in value on the market. This mechanism is known as a stop loss;

• High Short-Term Profits: In this type of strategy, shareholders have the possibility of earning high profits in the short term. In some cases, the amounts double in minutes or hours. 

What are the disadvantages of Day Trade

Even though the Day Trade strategy has a great advantage, which is the Stop Loss mechanism, this type of operation is extremely risky. What's more, if the investor doesn't have any kind of consent, they can incur huge losses. 

For this reason, this strategy is suitable for shareholders who already know the financial market in depth. It's worth noting that this type of strategy is dynamic, meaning it's essential to have time available to monitor operations. 

Is it worth investing in Day Trade

In principle, even if day trading works as speculation on the market, it is a good idea for investors who know it thoroughly. Otherwise, this strategy will bring nothing but losses and stress to the shareholder. 

If this operation was profitable, mainly because it was a bet, it wouldn't make any difference to investors. Traders can make good profits when this strategy works, and that's a fact. 

However, as the market is constantly changing, it is important to understand the risks and carefully analyze the data before making any investment. This is the best way to avoid major risks or losses. 

It's worth noting that, like any investment, Day Trading has its advantages and disadvantages. If you are a more robust and risk-taking investor, this is a great bet. 

It's essential to be aware of the nuances that occur during the day. Also, only bet if you are willing to follow the changes in the market.