A Typical Day in the Life of a Day Trader
Anyone who has ever read or watched a financial analysis video has been presented by compelling overt testimonial style adverts from relatively obscure day traders who have amassed millions of dollars in easy returns from their market prowess and stock trading savvy. From the sheer benevolence of their collective hearts, these kindly traders off their trading expertise in the form of free and sometimes paid instructional video modules and guarantees of fast success are cleverly layered over private jets, neon coloured Lamborghinis, beach houses and relaxing hikes through the forest. Some immediately bin these videos adverts by pressing ‘skip’ as quickly as possible. Others find them mildly compelling and surely for anyone one interested in equities or cryptocurrency the following question comes to mind:
Exactly, how profitable is day trading?
It’s likely that nearly every person who has purchased a stock has asked this question at some point in their investing journey but some, if not most, are dismayed by the famous quote which suggests “the system wasn’t designed so that most people could beat it.”
Day trading is simply the practice of executing day and swing trades to profit from intraday market activity. Typically, day traders close each position before the market’s close and few hold open positions overnight. Day traders tend to exploit price action within a daily range and these traders capitalize on the market volatility that drives some investors away from the market. A combination of technical analysis, market sentiment analysis and adherence to one’s gut instincts tend to be an integral part of everyday traders process.
While many traditional investors are afraid of volatility, it is perceived as a never-ending blessing for day traders. The volatility of cryptocurrencies has allowed many traders to benefit from sharp movements in asset prices and 20% maneuvers during the course of the trading day are not unusual. It takes nerves of steel and great analytical skills to make accurate decisions which will later translate to profits. The profits may be significant, so may the losses. That’s why experienced traders practice investing in multiple markets.
The day of professional day traders in a large financial institution is more challenging than most people expect. The day begins with checking the market updates in the stock market and pouring over daily analysis and comments in a Bloomberg terminal or other online trading communities. Feedback from the previous night tends to provide a good sense of market sentiment and technical analysis along with market events and news are all factored into the trading plan.
The life of a day trader requires hard work, and one shouldn’t expect to call it the end of the day at 17:00. The day typically ends on into after-hours trading and research, and for crypto-traders, the markets never stop. Word infamous investor George Soros warns that “Unfortunately, the more complex the system, the greater the room for error.” and Warren Buffett believes that “opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
Discipline when it comes to day trading is something that all traders need to practice- since no matter how profitable or negative the day 一 the funds need to be back in cash before the trader can call it a day. Benjamin Graham states that “the best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go. In the end, what matters isn’t crossing the finish line before anybody else but just making sure that you do cross it.”
The majority of retail traders suffer losses on their trades and only a small number of traders stay in the black when overhead costs like trading fees, taxation, and subscriptions are factored in. In spite of the trendy, nonchalant millionaire YouTube traders who promise viewers who follow their strategies will become an overnight millionaire, large swathes of retail traders still lose money. Pinpointing the trading or deficiency that leads to consistent losses from retail investors is something of an enigma, but there are those who are developing innovative solutions that will help retail investors learn the ropes, develop skills and confidently make profitable trades.
Take, for example, Artem Popov, co-founder of Roobee investment platform and one of the biggest Telegram community of cryptocurrency investors. According to Popov, market analysis emphasizes the importance of starting investments with a small number of funds. Despite this advice, he noticed that retail investors are faced with a barrage of challenges like expensive trading fees, regulations, high minimum investments, overly technical investment jargon and a host of other frustrations which complicate the process of investing. Add to this the regular occurrence that a large number of investment projects which could become insanely profitable are only available to accredited investors, financial institutions and investment companies can profit with them.
The continual development and application of blockchain technology are providing a new generation of companies that understand the issues Generation Z & Y traders face and each provides useful tools that facilitate one’s trading journey and make it more accessible, secure, and possibly profitable.
Here are a few projects that could help investors and traders achieve their portfolio targets.
Trading financial product highlights high risks, and it is typical for inexperienced traders to lose money until they get closely acquainted with the market nuances and get steady results. One of the solutions to avoid big losses due to the price volatility or ignorance is practising passive investing and investors tend to choose this method. Roobee is among fintech startups in the consensus industry, promising to bring an investment platform accessible to retail investors making affordable to invest into financial products like stock/venture capital market, IPOs, real-estate, loans, investment funds, companies in one click and with zero-fee transactions for a purchase. Roobee has already concluded its testing phase with successfully transacting more than $15,000,000 with the participation of 5,000 users in blockchain projects during private rounds, while it has secured already a $4,500,000 investment earlier during 2018. Roobee founders believe that investments should come without limitations and be affordable even for retail investors with minimum budget. The fintech startup is utilizing the power of the crowd by enabling their investors to trade with a starting amount of only $10 for all the investment products they do offer. Comparing to other markets their experienced team has set strict criteria for selecting companies and financial products offered to the investors.
Robinhood which has been launched back in 2014, it’s a disruptive platform which allows customers to buy and sell stocks and exchange-traded funds ETFs without a commission. The startup is mainly targeting to approach millennials, while only recently has expanded its trading options with limited cryptocurrency trading selection. The Gold service which charges a fee for access to margin loans is the only payment feature of the platform.
TWINO has played a crucial role in the rapid expansion of P2P lending in Continental Europe. TWINO is connecting investors seeking returns with borrowers searching for loans, through the digital landscape.
Clearly, the life of a professional day trader is not that easy 一 indeed it’s very stressful one 一 though it can be highly rewarding. The new generation of consensus FinTech applications
Nikolas Kostopoulos – CryptoShib Guest Author
Nikolaos Kostopoulos is a Fintech advisor incumbents with a focus on Capital Markets & asset tokenization. Nikolaos is a pioneer in the consensus industry since early 2015. He is an early adopter and enthusiastic evangelist for decentralized technology as a way to improve many aspects of the modern world. His Master’s thesis “Developing an optimal financial and regulatory governance mechanism for cryptocurrencies in the European Union” was among the very first academic papers to argue the need and the method for regulating cryptocurrencies in the European Union. Nikos is a frequent speaker at financial events related to regulation and Security Token Offerings.
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