It used to be that to day trade and employ your day trading strategies, you had to call your broker and make a trade. Not anymore — you can make a day trade easily in the comfort of your own home in front of your computer. While being able to trade at home has its benefits, the speed in which trading transactions occur now has fundamentally changed the way the markets work. Now, a mere push of a button can buy or sell millions of share before innocent investors have a chance to get out unscathed. Seasoned pros complain of low-volume trading that, they say, consists only of automatic bots that buy and sell at pre-specified trading levels, leaving the little guy completely out of the game.
However, even though day trading may feel like gambling in this new trading environment, think of how a mutual fund works, which most people view as a safe investment. A mutual fund is required to have 95% of its funds invested in the market at any given time. That’s great when the market is going up, but what about when it is going down? What ends up happening is the mutual funds absorb massive losses, which wipes out most of the previous gains. That doesn’t sound like a very lucrative way to hold your money.
So, before you start thinking that day trading is gambling, remember that even the safest investments come with risks.
