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Day trading refers to the buying and selling of financial instruments within a day. This is the name given to stock exchange transactions on a single day. If various positions are opened or bought and closed or sold again in just a few hours, minutes or even seconds, this process is called day trading. The people who try to make profits with quick buys and sales and small price changes are called day traders. The day trader is therefore in the sense of the investor. Another word for ultrashort trading in the time of a few hours, minutes or seconds is called scalping.

Now you're probably asking yourself a very important question. You are certainly wondering why it is so important for a day trader to sell bought positions on the same day? The whole spectacle serves a special purpose: the day traders want to prevent price differences that are difficult to calculate, so-called gaps. These price gaps arise precisely when the positions are held during the night.

Day trading is usually conducted with highly valued derivative financial products. For example, in the form of CFD and Forex trading. CFD trading is referred to as a derivative. The derivative security is a security whose value, or rather whose performance depends on the performance of one or more underlyings. You can imagine it something like this: A derivative is like a betting slip. You speculate on a future price and make profits if you have correctly assessed and analysed the situation. If you bet, for example, that the price will rise rapidly in the next few hours and exactly the opposite is true, then you may lose a lot of money.

Forex trading has certainly been done by every one of you before. Anyone who has ever had to exchange money because a different currency exists in the holiday country has already come into contact with Forex trading. The Forex market is also known as the currency and foreign exchange market.

So how are profits generated by day trading with derivative financial products? In the form of CFD and Forex trading, you can make enormous profits with minimal price differences. However, one must also bear in mind that equally high losses can occur. Daytraders try to keep up to date daily. Thanks to the latest news and technical chart analyses, many future price developments can be assumed.

Who doesn't want to earn a lot of money quickly? That's the tempting thing about day trading. But not only that attracts many people to day trading. People who are looking for a certain thrill or risk are also attracted to day trading. It's a stark contrast to long-term trading in securities. Day trading does not involve investing in stocks that are retained for many years. But especially newcomers to the stock market should be cautious when it comes to day trading. With this principle one can suffer very high losses in addition to the high profits.

This type of investment is and remains very risky, because the principle must be understood and only experienced investors who can assess certain risks well can do so. The psyche can also be affected by day trading over time, as important decisions regarding investments have to be made frequently and within the shortest possible time. Of course, wrong decisions also have to be taken sometimes. To become a good daytrader you need a lot of experience, knowledge, nerve strength and stamina. This is the only way to earn good money in the long run.

Day trading offers the possibility of profiting from both rising and falling prices. If you buy a stock in order to sell it again at a higher price in the future, then you have taken a "long" position. So you benefit when the price rises. By contrast, day trading also has a "short" position. Logically, the day trader makes a profit when the price falls. In theory, this variant is a loan transaction, as the sale of a security took place before the acquisition. Accordingly, the day trader borrows a share and sells it again in the same breath. If the price falls, the day trader can even buy it back at a lower price. The difference is then of course simply booked as profit.

Many beginners invest too little time in this really complicated matter. Most beginners get an account with a broker, transfer a little money and click around a little in various platforms. If the first trades were sent without really thinking about it and questioning the individual facts, the money may be quickly gone again. The next point is that with such a small amount no reasonable risk management is possible, but this should be one of the most important points for a day trader. Usually the deposited money is then quickly gone, the beginner throws everything away again and in the end goes home again as a loser.

The fact is that day trading offers oversized profit opportunities, but the risks are also significantly higher. With a conventional investment you would of course have a lower risk. Anyone who sees day trading as an opportunity to get rich quickly and effortlessly in a short period of time will no longer trade in the near future, but rather start playing poker. That this principle will drive you to ruin is hopefully clear to you. So daytrading can be a job like any other. Even if you were able to get the first information and acquire knowledge, it will take a while to really understand how this business works in the long run. With a little patience and ambition, everyone can learn and understand day trading one day.