Day trading has become a popular way to make money these days. While people are always trading stocks and forex, The practice jumped sharply during the Covid-19 pandemic when interest rates are low. People also had plenty of money, thanks to the Covid-19 stimulus packages and overall savings.
This has led many people to consider pursuing a career as a day trader or at least combining activities in the financial markets with their current job. So which path is better?
In this article, we will compare the pros and cons of being a part-time trader versus a full-time trader.
What is day trading?
Day trading is defined as the process of buying and selling financial assets and getting out of them over a short period. The most solid definition of day trading It ensures that trades are closed before the market closes on any given day. Trades that are left open for a few days are known as swing trades.
daily trade It is different from investing. Investors seek, buy and hold assets such as stocks, commodities and cryptocurrencies and hold them for a long time. In most cases, investors hold their positions for a few months or years.
Investors and traders have different goals. for one, investors Buy assets because they are Believes that they It will continue to rise over the long term. They often think that the origins We are Undervalued.
On the other side, Traders tend to be less focused on the long term asset feasibility. Rather, they are We are especially focus on short term volatility from an asset. They can trade any asset provided the chart patterns allow it.
Part time trader vs full time trader
there Two main ways to day trading. First, you can decide Be in circulation all day. Alternatively, you can decide to be a part-time trader. A full-time trader is someone who He makes money just by trading financial assets.
On the other side, Part time traders They are the people who She has other functions Then day trade for a few hours each day.
In most cases, these people open their positions for a few minutes or hours each day. Part time trading It became possible due to the ease of trading And the fact that there are mobile apps now. Also, companies like Robinhood and TD Ameritrade have offered commission-free trading.
What are the similarities between day trading full time vs part time?
there Several similarities And the differences between full time and part time trading. First, in both cases, Traders do not necessarily focus on the long-term fundamentals of a company.
In this, traders focus on short-term price movements. As a result, they are mostly focus on short-term price movements and Paid.
Secondly, the two traders tend to own a short term horizon. Unlike investors, traders tend to focus on the short-term gains of an asset. They are not interested in determining a company’s valuations and its long-term value.
Third, two types of merchants guarantee They closed out their positions before the end of the day.
They do this to avoid the upward or downward gaps that occur when the market closes the next day. Glitches can occur for many reasons, including:
- Mergers and acquisitions
- Product launch
- Seller short reports
Moreover, it uses several types of merchants strategiesincluding the use of Technical indicators Such as moving averages, relative strength index (RSI), and MACD.
They also use price action strategies Such as triangles, head and shoulders, ascending and falling wedge patterns.
Part time trading spreads vs daily spreads
There are many differences between full time traders and part time traders. Firstly, The obvious thing is that the primary source of income For full time traders. On the other hand, part time traders have full time jobs. As such, they use day trading to supplement their income.
Second, in most cases, Full time traders open more deals Part time tradesmen. As a result, it can be more profitable to become a full-time trader than a part-time trader. However, in some cases, many part-time traders are able to make solid profits in a long period.
third, Full-time traders have more access to the market. These people can trade for 24 hours because the market is usually open all the time. While the stock market is open for a few hours a day, the forex and cryptocurrency markets are open for 24 hours.
Advantages of full-time day trading
There are many benefits to being an all day trader. Some of these benefits are:
It can be very profitable
Being a full time trader can be very profitable compared to being a part time trader. This has been happening since they did More time to analyze and open trades.
In contrast, part-time traders tend to open only a few trades per day. As a result, all factors have remained constant, and these traders tend to be less profitable.
Reach more markets
Another pro of a full time trader is that he has more access to more markets than part time traders. Part-time traders, especially those who trade US stocks, tend to be in the market for a few hours each day.
Also by trading full time you can take advantage of the volatility offered by the first and last hour of the trading session.
additional, When you put too much focus on an activity, you become a specialist in it. The same is true in day trading.
People who focus too much on it tend to become its specialists. As a result, they learn how to interpret the market and execute trades. as a result of, They gain experience required to perform better and better.
Finally, as a full-time trader, You are an independent bossWhich means you can trade when you want. You can take days off when you feel like it. Also, you can too It was decided to start a day trading deskwhere you hire and manage people.
Related “ Full-time Trader vs. 9-to-5 Job: Which Career to Choose?
Cons of full time trading | The pros of working part time
There are many Cons of trading full time. Firstly, It can be very riskyBecause you can lose all your money when the markets move against you.
experienced full time Traders solve This mode by making sure that they have Good risk management strategies.
second, Getting a second job can help your money through Get a regular stream of money. As a day trader, you will face a situation where you will not make a profit in some months. So, with a regular income, there is a possibility that the trader will be in a much better position financially.
third, It can be emotionally challengingEspecially when things are not going well. Moreover, being a Part time trader means you Have a better work-life balance. But it depends because many full time traders have time to spend with their families.
the resolution For being a full time trader It can be tough Because of the risks involved in the industry. In most periods, many people trying to be traders fail.
Therefore, if you have a full-time job, we recommend that you take some time off during your transition. Leave your job only if you have become consistently profitable.