When you start out in investing or trading, basic concepts can sometimes take getting used to. The world of financial machinations doesn’t work the same way as a lot of other industries or businesses in the world do.
Learning how to trade stocks can be an ordeal. But the skills that you develop and the respect for the world of finance that you build can be essential as you look to build real, generational wealth for you and your family. Just like the spread used in sports betting, the difference between the bid price and the ask price in stocks can be incredibly consequential.
Day trading is an unforgiving business, just like sports betting. Those in the game are not in it for fun. They are out for blood. So you need to dip into your competitive side in order to really make a difference. You need to be on your game to take advantage of daily price fluctuations.
When you are looking to trade with short term gains in mind, the risk can go up. You need to be sure that you can unload any stock that you get your hands one. If the stock is very liquid that should not be a problem. The spread between the bid and the ask is very small at that point, because so many traders in the market are ready and willing to buy or sell the stock. That is one of the fundamental aspects of stock trading.
Active traders are usually investors that place 10 or more trades per month. It is the direct opposite of passive investing. Day traders do not have much interest in what the companies are doing for a business. They are only concerned with the price for that minute or that hour. It is a dangerous business for those that are not prepared.
So the way to be prepared is to learn as much as you can about the strategies and techniques that are underlying day trading. Watching other day traders and seeing how they approach the market is certainly a good way to build those skills. You can also find a community of day traders that takes you in and offers tips and tricks to get started.
Passive investing is much different. That is where you do a ton of research, learn everything that you can about a company or corporation and then put your money into that stock. You are looking for long-term growth that outpaces the market and most mutual funds or stock indexes. That is hard to do. That is why many casual investors just end up putting their money in low-cost mutual funds and letting the years of compound interest do the work for them.
Betting on sports and day trading have a lot in common. Success in both depends on an ability to manage risk. You also need to be good at crunching the numbers that tell you what trends to watch for and what traps to avoid. Strong research skills and the ability to read advanced charts and absorb advanced statistics are vital parts of both pursuits. Just know that both can leave you in the dust if you don’t have the chops to stay afloat.