What is Day Trading and is there a better alternative?

Lately there has been a lot of talk around day trading because of its potential to earn a lot of money. While day trading has become a popular form of trading in the past few years because of its potential to make big financial gains, unfortunately day trading is also inherently volatile and can lead to huge losses for both experienced and novice traders.

In this article, we’re going to explore what exactly day trading is, who it is and isn’t suitable for, and alternative or lower-risk options. 

What is Day Trading and Who Does it?

Day trading is the act of buying and selling stocks, shares, or other investment vehicles on the same day. It relies on the basis of small, short-term price fluctuations to make a return for the investor.

Day traders are usually well-educated, wealthy individuals who have a deep understanding of the markets. They are often professional stock brokers, fund managers or investment bankers. Day traders use this knowledge to take advantage of small price movements in stocks, futures and other instruments to make their profits. They rely on strategies like scalping, range trading, news-based trading, and high-frequency trading to maximise their returns over the course of the day.

Being a successful day trader requires a lot of time, knowledge, and capital. Day traders are typically not a risk-averse population and are only concerned with making money on that particular day through short-time trades. They do not care about long-term investment or saving for retirement.

Day traders often typically suffer severe financial losses in their first months of trading, with many dropping out of the practice entirely and never going on to make a profit. Day trading is naturally also extremely stressful given that traders are often gambling large sums of money (which is often borrowed) in a very high risk setting.

Is Day Trading legal?

Day Trading is legal in Australia, however like all forms of investing it is important that any trading is carried out through an authorised broker and regulated by the Australian Securities and Investments Commission.

Just because day trading is legal however, that does not mean it isn’t extremely risky.

Are there alternatives to Day Trading?

To be successful at day trading you need to have an in-depth understanding of how markets work and the various strategies for profiting off them in the short term. You also need to have sufficient capital and a big tolerance for risk. As such, day trading is not for everyone and is rarely advised for the average punter.

There are a number of alternatives to day trading that can provide sufficient returns with generally lower risk. Traditional investing (long-term investing across a more traditional portfolio like stocks and mutual funds) is one option. There’s also swing trading, a cross between day trading and longer-term investing, where traders hold their positions for a few days to a few weeks.

Another alternative that is similar to day trading with potentially less risk is the model offered by Freedom Securities. 

What is Freedom Securities?

Freedom Securities has been operating since 1996 and is based on investing on the Thoroughbred Racing Industry (via the TAB). With Freedom Securities you can decide how much you want to work, invest and earn and you can use it to supplement your current income or replace it entirely.

The Freedom Securities system is built on proven mathematical theory to deliver consistent investment returns and daily cash flow. The software the business is centred around selects daily investing opportunities for you from the days races. These opportunities are based on a tested mathematical algorithm and statistical probability, drawing on historical statistics which show that 85% of winners come from the top four favourites, so you can simply follow the system’s recommendations with confidence. Races with hot favourites do not fit the system, which is based only on races showing a more open field.

Unlike day trading, which is stressful and requires a lot of time, the Freedom Securities software is easy to use and, generally speaking, only requires 3-4 hours per day of your time to see results. You don’t even need to know anything about horse racing because the software makes all the recommendations for you! You simply select the next race, within a set time limit, and within a few seconds, a complete set of odds and returns appear on your computer. If it fits, the system will tell you to place the bets.

The amount you can make depends on a number of factors, including the amount of working capital you put into your business and your ability to follow the rules of the system. For example, potential returns on a recommended minimum capital input can be:

  • $10,000 capital for a $100 net return per race.
  • $20,000 capital for a $200 net return per race
  • $30,000 capital for a $300 net return per race.’

We stress that these recommended capital inputs and net returns are purely estimates and do not represent a guarantee of profit ratio.

The best part is you can work from home (or anywhere!) while setting your own hours. We’ve already helped many of our clients break into this industry and can do the same for you. Speak to us today to find out more.

Conclusion

While day trading has the potential to make you a lot of money, it is also extremely risky. You need to have in-depth knowledge of the markets and strategies for investing, along with significant time and capital. You also have to be prepared to lose it all.

There are alternative options to day trading that can offer good potential returns, with the Freedom Securities platform being one of them. If you’re interested in learning more about the benefits, speak to us today.