volatility Archives | DayTradeFEED.com

The Pros

Day Trading is great because all trades are completed when the market closes for the day.

Futures usually open at a price that is very different from where they end. Volatility means you can fall asleep at night in a winning position, and wake up at a loss. Day Trading provides rest from this risk. Literal rest. A good nights sleep.

There is no overnight risk with Day Trading, which is one of it’s biggest Pros.

There is a lot to learn when entering the trading world.

Day Trading is like an accelerated learning course in trading. You’ll make more trades in a day than position traders. This will help you learn quickly what is necessary for success. You’ll

The Cons

It takes great discipline to day trade. It can be vey difficult to stay the course and not over reach. Many who try out day trading find themselves overreaching and over trading.

Commissions can also be an issue when Day Trading. It is very possible to break even, but have a big commission bill at the end of the year. To make money day trading you have to make many winning trades.

A Word On Volatility

Short term trading can outweigh long term investing in certain situations. Volatility of the market will determine which approach is most favorable.

In a highly volatile market, prices are moving up and down frantically. This is what you want to look for. The high volatility allows you to buy and sell for profit within a days time. A stagnant market is a no go for day traders.

Day Trading takes a lot of preparation, education and discipline. It can me really difficult to make money Day Trading. It is crucial that you treat it seriously and dedicate proper time.

However, if you do your research and map out a game plan, Day Trading can be a very rewarding.

Volatility: What is it and how does it affect day trading?

Volatility = Stability

Above all, in its most basic definition, volatility can be described as: “liability to change rapidly and unpredictably, especially for the worse.”

In day trading, it is the measure of a security’s stability. It’s usually calculated by finding the standard deviation of a return that has been compounded over a specific amount of time.

Define for the Masses

If you’re not into day trading, the definitions above could be a little tricky to understand. Fortunately, Day Trade FEED appeals to all levels of knowledge surround day trading!

Basically, volatility is the amount of movement a market sees over a certain amount of time. For instance, if a market has gone up and down more frequently than on average, that market has a high volatility index.

In contrast, if the market stays relatively consistent and doesn’t see many peaks or valleys, this market would have a low volatility index.

Low vs High Volatility: What does it mean?

Because of the nature of the market, certain movements can make or break a day trader’s account. This depends on if they have a short or long position in place.

When a market has a high volatility index, this means that the market has a high potential for risk. However, it also means that it has a high potential for reward.

When a market has a low volatility index, this means that the market has a low potential for risk. However, it also means that it has a low potential for reward.

Should I be scared?

Absolutely not!

A lot of market movement means there are a lot of chances to make money. Traders simply need to make sure they know which way the market is trending.

Also, pay attention to your charting software to ensure you are in and out of trades at the most efficient times possible.

volatility

Day Trading Futures: Pros and Cons