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BUSINESS NEWS - Terms like day trading, bitcoin, forex and futures are thrown around quite often these days, and while they sound exciting and do have plenty of benefits, there is a lot you need to know before heading down the avenue of trading. As with anything in life, there are pros and cons, advantages and drawback, and nothing is a given or guaranteed. However, if you have an interest in finance and are looking to change things up in your life, perhaps bring some excitement into the quiet Garden Route life, then learning the basics of trading could be the first step towards a new adventure. Let's check out the need-to-knows of day trading.

Investing versus day trading 
An investment is commonly known as putting down an amount in the hopes that it brings you dividends in the mid to long term. An example of this would be investing in a property or even putting a specific amount into a special savings account with your bank, which then gives you increased interest due to your commitment of leaving the money with them for a predefined term (usually 12, 24 or 36 months). A good property investment is either purchasing a home or apartment for you to reside in, thereby saving you rent and increasing in value over time, or buying a place for the sole purpose of earning income through rental from tenants.

Both of these forms of investment are great ideas, and saving is always better than unnecessary spending, but they are longer term investments. Many people, particularly these days, are interested in fast income, something that will bring them larger amounts of revenue faster. This is where 'jobs' like day trading come in, which essentially involves a person actively buying and selling securities, such as stocks, currency pairs, commodities, or cryptocurrencies, within the same day—hence the name. The goal is to capitalize on short-term changes in price, meaning that you use either your own or borrowed capital to buy securities and then monitor the price of said securities to see an increase. When you see that increase, even if it just a few cents, the trader will sell again, thus making a profit that can be substantial if the number of securities bought are substantial too. Keep in mind that people who do this well often have a background in finance and understand the markets. Interested parties could look into demo trading, an ideal way to get your toes wet but not use real money. So, you can start learning with little risk.

Knowledge is power 
It's been mentioned above that day traders, living in a fast-paced world with ever-changing markets, usually have a background in economics or a degree in finance. While this is not a prerequisite and many people without degrees are more successful than college graduates on account of street smarts, the knowledge gained during an education in finance is incredibly helpful in this field. There is more to it than finding a security or stock that seems to be low, buying it, and then selling it again before end of business. People involved in day trading often borrow or leverage capital in order to purchase additional assets, which means that they are responsible in the event that something goes wrong. And with this industry being based almost exclusively on speculation, the risk really is high.

If you are not a risk-averse person and you enjoy the thrill of analyzing markets while living slightly on the edge, then maybe trading really is something for you and, in that case, it's time to come up with a day trading strategy—the same as you would with any other venture you're keen on. You are going to need a good amount of focus and a whole lot of concentration, as graphs and charts aren't that easy to read and comprehend. Take your time and learn as much as you can about any securities you're interested in. You can choose to focus on one particular security, let's say cryptocurrency, and dive into blockchain technology and all things crypto-related, or you could do what many traders do and keep your options open by trading in several securities. This will allow your portfolio to be diverse and, over time, you can tone it down to the securities you fancy and that bring the most profit based on your experience. 

Weigh up whether this seems like a sound plan to you, as opposed to perhaps investing in property. Never be shy to reach out to acquaintances who may already have a foot in the door and ask them questions about the market. Lastly, as much as you know about trading, you also have to know yourself. Assess the level of risk you can handle and be true to that; there is no point in getting into this industry if your personal beliefs or character traits will suffer or be challenged.

Is it worth the risk?
Look, no one will ever be able to or should tell you what to do with your time and money. Think about the pros and cons, what you could gain and what you could lose, and then perhaps start off with demo trading as mentioned above, before you start to invest your own (or someone else's) money. There is definitely money to be made on the market, however with it being rather saturated and volatile, you should have a clear picture of what you want and then see whether that is even possible. It is going to take a lot of time and effort to get the hang of it, even with prior financial knowledge, but it's worth it for some people as the truly enjoy the exciting nature. No two days are alike. But always trade responsibly and remember: with great reward comes great risk.

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