December 25, 2006

SWOT on Day trading

Strengths

--There is little systematic risk, and little overnight risk.
--Margin Trading: Brokers allow u to take as much exposure on your margin money as you don't loose it.
--A day traders job is over once his targets are achieved, that sometimes may be in a small time(even 1hr), and then he can leave the terminal for a movie

Weakness
--Not for newbies, screaming with fear and greed.
--Slippage costs often bite day traders unlike those taking deliveries.
--Requires split personality: At times patient and dormant like a recluse, then in a wink charging like a bull. As such may not suit temperament of some.
--Requires focus all the time. You can't take eyes off screen ,your life become ticks , Trading in more than four stocks at a time is not advisable.
--One misses the chances of sitting and riding profits, like in swing positions

Opportunities
--Huge profits that too in a while.
--Some Professionals find that profits from day trading are more consistent than those from Swing trading.

Threats
--Big losses may come in just as profits.

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