Day trading is something completely different than investing. A day trader buys and holds stock for small time intervals that last from a few minutes to a day or two. An investor buys stock and holds it for much longer. Day traders intent to make money from small fluctuations in stock prices.
There have been parallels been made between day trading and gambling. The truth is that the two don?t have many similarities. A day trader must base his actions on specific data and analysis before a stock purchase and sale is made. Luck doesn?t play a role in the decision making process of either the investor or the day trader.
Day traders base their buy and sell decisions on the fact that stock prices fluctuate constantly. The volatility of stock prices is what day traders depend on to make money. Conversely it is also what will determine if they will loose money. It is these daily small fluctuations that the day trader depends on to make a profit.
All day traders capitalize on the small daily stock movements by trading large numbers of stock. This volatility that is actually what day traders rely on to make money is also what determines their losses. Stocks don?t always fluctuate upward and as a result day trading is a risky business.
If you are thinking about playing some money in the stock market then you should be aware of the potential risks. You wont become an investor or a day trader overnight. The idea that practice makes perfect applies to both investing and day trading.
The primary difference between an investor and a day trader is time and percentages. These two terms shouldn?t be confused because they are used to describe two different techniques.
Taking the time and learning about both investing and day trading will place you in a better position when the time comes to decide which method you are going to use. Learning what is involved in these processes will place you in a better position when making investment choices.
The best thing you can do before you begin investing is to talk to an Investment Advisor. You need to locate someone in your area though. If you live in Toronto then you should locate an Investment Advisor Toronto.
Source: http://www.tritonatmmachine.com/2011/06/03/day-trading-and-investing-differences/
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