Intraday trading is exactly what the name suggests – buying and selling the stocks on a regular basis. Volatility is the main factor that helps intraday traders earn profits from this market. While volatility can grow your profits significantly, it also involves a huge risk of losing money due to the changes in the price movements.
It is, therefore, important to learn both the pros and cons of intraday trading to get a better idea of how this market works and how exactly you can grow your money. In this post, we will walk you through a few advantages and disadvantages of intraday trading. So, keep reading to learn more to know The Pros and Cons of Intraday Trading.
The Pros of Intraday Trading
Buy Low and Sell High
Volatility in the share market provides intraday traders with an opportunity to buy shares at a low price and sell them at a high price. You can leverage the market movements to generate significant profits from your investment.
The economic and political factors can have a profound impact on the stock price of the company, which can lead to price movements. It gives traders an opportunity to learn the market patterns and follow the current trends to earn decent profits from their investment within hours.
No Waiting Period
Unlike the long-term investment instruments, intraday traders do not have to carry the overnight risks. The stocks are purchased and sold the same day, in fact within hours. There is no waiting period involved in the investment, meaning you can withdraw the money whenever you want.
Every day brings a fresh start for you and gives you an opportunity to start afresh forgetting all the events that took place in the past. Now that you have withdrawn your capital from the investment market at the closing time, you don’t have to bear the risk of any sudden price movements.
It can be a Full-Time Employment Opportunity
Making huge profits in a small amount of time is quite encouraging for the audience. That’s one of the reasons why people find intraday trading quite motivating. They are willing to take it as a full-time employment opportunity. You can be your own boss and make significant profits from small investments. Not only does it help you financially, but it provides you with an excellent opportunity to meet your day-to-day financial goals. Many intraday traders started trading as a part-time money-making task but became full-time traders.
Minimal Research Required
The fundamental analysis of the stock market is required for long-term investors. Those who trade on a regular basis can research the basics of the company and buy the shares that seem volatile and profitable. You do not have to spend hours researching the company, its goals, financial position, and other details. Though thorough research is highly recommended, it isn’t a necessity.
The Cons of Intraday Trading
No Fixed Amount
The major disadvantage of intraday trading is that it doesn’t guarantee a fixed income. There is a chance you might end up paying from your pocket and never recover the losses from this investment. Sure, no investment guarantee fixed returns, but intraday trading comes with a very high volatility rate. So, there is always a chance you might lose more than expected.
It Carries a High Risk
As you don’t get enough time to research the market and make sound decisions, the risks involved in intraday trading are quite high. The investors make an investment in the market without analyzing it properly.