No matter how much money you make, chances are that you’d like to make more. The reality is that money is one of those things that no one seems to ever have enough of. So naturally, as consumers we are drawn to opportunities to earn a reliable extra income. As a finance professional, I’m often asked if it’s really possible to make an extra income through day trading? The answer is yes! As a matter of fact, there are tons of people out there right now that make a regular income through the process of day trading on financial markets. Today we’ll talk about what some of the most common forms of day trading are and what assets are most commonly traded using each day trading vehicle.
Day Trading With Binary Options
While binary options are a relatively new trading vehicle, they have quickly grown to become one of the most, if not the most, popular day trading vehicles. That’s because binary options are the only day trading vehicle that gives the trader the opportunity to know how much money they stand to gain or lose on each trade before making an investment. With binary options, there are only two possible outcomes, in the money or out of the money. It’s up to the trader to determine which direction the values of financial assets are headed. If the trader is correct, the trade ends in the money and the trader earns a profit. If the trader’s prediction is incorrect, the trade expires out of the money and the trader realizes a loss. Trading commodities with binary options is very popular. However, all asset classes, including stocks, currencies, commodities and indices are available for trading!
Day Trading In The Forex Market
The one asset that has the highest level of demand is currency, and day traders tend to love this asset class. Because of the overwhelmingly high demand in the currency market, the values of currencies are consistently fluctuating. This gives traders several opportunities to take advantage of the trends and turn money into more money! Trading currency is commonly referred to as forex trading. Essentially, when forex trading, traders buy and sell currencies in exchange for other currencies to take advantage of the spread between the price at which the currency is purchased and the price at which the currency is sold. However, if you plan on giving forex trading a shot, it’s important to do your research first. The high demand in the market leads to an incredibly volatile atmosphere which can be risky.
Day Trading Momentum Stocks
Finally, another very common way to go about day trading is the process of day trading momentum stocks. Momentum stocks are stocks that are likely to make big moves in the market over relatively short periods of time. This happens most often after important business releases with regard to the businesses represented by the stocks. For example, it’s very common for biotech companies to enter experimental treatments into clinical trials. Generally, when a new treatment goes into clinical trials or results become available, investors become overwhelmingly excited, sending the stock up dramatically. So, the day trader would purchase a stock in the morning after a big release of news, only to sell the stock before the end of the day when the growth has peaked in order to take a profit. This is best done with penny stocks, or stocks with a value of under one dollar. These stocks offer the biggest opportunities for growth over the course of a short period of time.
Day trading can be an incredibly lucrative endeavor, and as you can see above, there are several different vehicles for day traders to generate a profit through. The key here is finding the vehicle that works the best for you, doing your research so that you understand everything there is to know about the trading vehicle, and executing your trades through a strategic plan. From there, profits will come!