Day trader Versus Investor, most argument question in the investing world, which is better and how are you going to decide. The day trader’s foremost objective is to trade expensive and volatile stocks on the BSE and NSE markets in increments of 1,000 shares or more, and profit from the small intra-day price movement of any stocks.
The day trader may make many trades in a single day or a single day, holding onto stocks for only a few minutes (or hours), and almost never overnight. Day traders are short-term price and earn speculators. They are not investors, and they are not gamblers also.
Day trader Versus Investor
Day trading is not a form of investing. The day trader’s time frame of analysis is relatively short: one day. Their only intent is to manipulate the stock’s intra-day price swings or daily price volatility. Unlike stock investors, day traders do not pursue long-term value appreciation.
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Stock volatility is typically a rule of the market rather than an exception. Most stock prices move up or down on any given day due to a combination of external elements. Actually, if the market is relatively calm, there are always stocks that are volatile in nature. Day traders seek to recognise a stock that has a trend and then go with that trend. “Trend is a friend” is a familiar motto among day traders.
Day traders seek to pick up a moderately small stock movement, 1/8 or more on that stock. If day traders are trading a large block of shares of any stocks (that is, 1,000 shares per trade), then day traders will profit $125 from a 1/8 price movement. Contrariwise, if a day trader acquired 1,000 shares and the trader was wrong, which also occurs, then the day trader will lose $125 from a 1/8 price movement. Volatility is a double-edged dagger.
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For expensive stocks that trade for $100 or more, a 1/8 or 12.5 cents movement is such a small relative price difference that it occurs all the time. Therefore, there are plenty of stock day trading opportunities. It is not familiar to see a day trader executing many, sometimes as many as 100, trades in a single day. On the other hand, an investor’s time frame is considerably longer. Investors desire a much larger price movement than 1/8 to earn the desired rate of return. That takes time.
In short, day traders seek to remove an income from intra-day price volatility by trading the stock often, while the investors seek a long-term capital appreciation. For now, you know the most about Day trader Versus Investor, use this information for a better purpose.