What is Day Trade and how does it work?

When you talk about “day trade” what do you think? many are quite confused on the subject, the term day trade is English which means “transaction of the day” are investment operations of buying and selling shares that you do on the day and have resulted in the same day or even in minutes.

In short, you invest your money in a purchase or sale of various financial stocks, which will result in a return of both profit and loss.

How it works?

In practice, for example:

An investor buys a share at 7 am paying R$ 20.00 per share, and at 8 am, sells it for R$ 50.00 receiving a profit of 30.00 per share invested. Just as everything in the world is focused on buying and selling something, the trader market is the same way. This investment model is known as buying and selling.
An investor sells a share at 7 am for 100.00 R$ and, at 8 am, he buys back the invested share for 140.00 making a profit of 10.00 R$ for each share.

Advantages and Controls

Advantages

• Leverage: an investor is able to invest more than he has in the account, through the brokerage firm, by the “guarantee margin”, which is when the investor does not have all the money in the account, but has other investments that the brokerage firm understands can be liquidated if the operation is not honored;
• Agility: are operations carried out on the same day that return a short-term profit;
• Liquidity: you can withdraw your profit daily, as it is available within 24 hours of the operation;
• Possible short-term gain: it is not guaranteed, but it has the possibility of earning a high profit in a short time.
• Gains from falling stocks: I sell stocks when they are expensive and buy them back when they are

low.

• Payment control: Allows you to automatically schedule stock sales in case they are not being valued and not reaching the desired value.

Disadvantage

• Risk of big losses: the day trader is a risky operation, bringing a big loss depending on your operation.
• Time needed to follow the market: read about what is transitory in the financial market to be able to understand which stock is being appreciated and which will depreciate.
• Having emotional control: controlling emotion is very difficult sometimes it seems easy but it is not, seeing your money lost is depressing, and when you lose you want to invest without analyzing where you can have more losses until you go bankrupt.

How to start day trade?

You need to register with a brokerage to have access to shares, deposit capital to start trading. It is advised for those who are starting to go after a professional in order to have a better understanding of the stock market. There are several groups on Telegram and Whatssap that can help you understand, there are free and normally paid courses to teach you from scratch. So, because day trader is a high-risk investment, don’t just study to get good results.