Advantages and Disadvantages of Short-Term Trading

Advantages:

· Most day traders get many opportunities each day.

· This type of trading is very exciting and motivating.

· If you have a tactic with an expectation of 50 cents or more per dollar risked, you may never have a losing month--or even week.

· You don't have overnight risk in day trading, so there is little or no margin necessary even in big markets.

· High probability entry systems, which most people want, work with short-term trading.

· There's always another opportunity to make money.

Disadvantages:

· Transaction costs are high and can add up.

· Excitement usually has nothing to do with making money--it's a psychological need!

· Data costs are very high because most short-term traders need real-time quotes.

· Many high-probability entries have losses that are bigger than the gains.

· Short-term systems are subject to the random noise of the markets.

· The short-term psychological pressures are extreme.

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By Stock Advisor Group's Editorial Team

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