5 Myths of Day Trading Uncovered

Day trading has a certain mystique about it But this mystique has also led to a number of common misconceptions about day trading. While experienced day traders know that these are simply not true, less experienced traders are often misled by these myths.

Myth #1: Day Trading Doesn’t Work. A pragmatic look will show this is not

the case. Many hedge funds and banks employ full-time day traders, and these traders make their living entirely from commissions on their profits. If they weren’t profitable,

they wouldn’t eat. Transaction fees are low and traders can learn to recognize repeatable patterns Being a successful

day trader takes skill and the right temperament, but

it can be incredibly profitable.

Myth #2: Day Trading is Zero-Sum. (In other words, for every trader that

makes money, there is another one who loses.)

There is nothing further from the truth. Just because day traders work on short intervals doesn’t mean that the market

stops gaining in value. Profits on individual day trades may be smaller than

on long-term positions because of the difference in timeframes, but overall, net

profits are generated.

Myth #3: Day Trading is an Easy Way to Make Money. Day trading is far from easy. It requires emotional, physical and mental strength and it is not for the weak of heart. If anyone tells you otherwise, they have never been a day trader.

Myth #4: Day Trading Carries Huge Risk. Day trading is certainly more risky than long-term investing, but day traders aren’t foolhardy. The penalties for reckless actions are higher in day trading because of the large positions that day traders take. However, day trading is only as risky as you want it to be and experienced day traders know how to manage their risk effectively. If they stick to their game plan and avoid impulsive actions, then they can generate good profits with acceptable levels of risk.

Myth #5: Day Trading is Gambling.

While it’s true that in the wrong hands

day trading can turn into gambling,

successful day traders actually use this

fact to their benefit. In day trading, doing

the opposite of what could be called

‘gambling’ is precisely the way

professional day traders make money.

Instead of chasing losses, they scale

down. Instead of betting randomly, they

wait for high risk:reward opportunities. In

fact, successful day traders are anything

but gamblers.

Want to learn more about day trading? Contact us today to speak with a

friendly NONKO representative!

www.nonkotrading.com