The Advantages and Disadvantages of Short-Term Trading
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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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