Those who have some idea about stock market or have visited any broker office or, at least have any friend working in a broker office should have heard the term ‘Stock Trading’ or ‘Day Trading’. However, most of them have no idea about what it exactly meant. Here is an article to explain what is stock trading or day trading.
Once if you go through huge number of investment articles in this blog, may have noticed in various places that I am totally negative on stock trading. The reason behind this is, in the world of stock market, we can meet two types of people, stock investors and stock traders. To become successful with stock investments, an investor should be aware about the meaning of both investing styles and need to select proper path to build wealth.
Day trading, better known as stock trading, deals with stocks for a small period of time. Stock traders buy stocks and immediately sell it within some time or maximum a day to book very little profit of some pennies from each stock. To identify the stocks to trade, they are taking the help of technique known as technical analysis or candle sticks which doesn’t have any complete success to claim.
They are also always in front of the television channels to track each and every political and economy news that bring the market up or down, to take related buy or sell actions. In plain English, a group of gamblers love to make the tax department and broker rich by emptying their pocket.Technical analysis is a method to analyze stock from historical up and down trend data as well as past buy and sell volumes. Until now, I have not understood the idea behind such analysis method and how it helps a trader to decide the future trend of a stock that got only able to predict. Confidence level of a trader with high gambling mindset would be an ultimate winner to take decisions upon such useless methods well proclaimed as the tool to make traders millionaires in a day or week.In simple words, stock trading is nothing but gambling. It is similar to any online lottery. People blindly select some numbers and if it won, he will get money or need to suffer lose. There is no neutralization in this activity. Either you will get money or will lose money. An example, if a day trader buying stock and the price sustaining after the stipulated time to hold the stock, day trader forced to sell it. There will not be any gain for such day traders but he has a certain lose in the name of broker commission and transaction tax.The psychology behind a stock trader is more interesting. Majority of them commit to stock trading by the greed to become millionaire in a fortnight or by the influence of other people who are already a trader. They commonly feel that, trading activity is the best to make money in a day or week very less work. I consider this is a worst ever thought. Those who know the nature of money well, never think to make money in a day, week, month or some years.
It is of course, right to say that, Ignorance, impatience along with dominating greed are the factors that may have introduced day trading. It is useless to try cutting a tree that grown in someone’s land than planting and waiting patiently for it to grow. Day trading is just similar to this example. Instead of having the most required qualities – patience and common sense – they are trying to pluck fruits from someone’s apple tree.
As a newbie, selecting the stock trading instead of stock investing is very dangerous because of its gambling nature as well as non availability of trustful resources that have to identify self than depending on anyone else. It is always advised to select parallel investment instruments than directly deal with equity market if you don’t have proper knowledge in it.
This is an enhanced version of an article posted in this blog earlier on this subject.
Sherin Dev is the founder and editor of Investinternals.com Blog. Learn more about him here. Follow him on Twitter @Moneyhacker or be in touch with him at Facebook
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