By their definition, day traders typically buy and sell stocks, foreign exchange, futures and other securities, entering and exiting positions throughout the day. Using their own capital, day traders aim to make small – but frequent – gains by closely watching the financial markets throughout the trading day.
Within this category, there can be brand-new, independent traders all the way up to institutional day traders who all share in common a shorter time horizon, differentiating themselves from longer-term investors. Day traders pay close attention to supply and demand, patterns in pricing and the overall emotion of the market on a daily basis, while contributing to the global economy. Ideally, they take advantage of short-term and often small changes in the price of a given security.
Day traders average about $58,000 in salary per year, according to Glassdoor. Beyond personal income, however, they also provide larger value to the stock market and society alike.
What a day for a day trader
Skilled day traders certainly offer research and expertise that can benefit other traders and investors. They monitor financial markets throughout the world, examine analyst as well as media coverage, and perform crucial research on the markets and financial trends. In addition to all of this, following are five key benefits that day traders provide:
And here’s one more benefit: Day traders pay taxes on their income, which can then be used to fix bridges, support public programs and ideally create a better society.
And one more: This career is open to anyone. It is agnostic of age, color, sex, religion, culture or background. While many new traders will struggle or fail, this profession is accessible to anyone with the funds to begin trading (traders must maintain a minimum of $25,000 in trading accounts on any day they trade). Nor do many traders require expensive office space, large teams or close management.
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Day after day after day
With more people stuck at home during the global pandemic, the popularity of day trading has skyrocketed, with many companies reporting record numbers of new accounts throughout 2020.
Market swings can be appealing to day traders. But anyone dabbling or diving into this career must be prepared for the highs and lows of this profession – often in a single day or single hour. The gains can be spectacular – but so can the losses, which is why it’s important to prepare, research, plan, and know when to hold or fold.
Traders and investors of all levels make an impact on the market, the economy and society – day traders just have an opportunity to do so day after day after day.