With the advent of the Internet, participation of common man in trading in stocks and crypto currencies has increased to a great extent. Many people have started doing day trading to earn a living quitting their jobs. With the increase in popularity of crypto currency, many people have started crypto day trading. But one should remember that day trading is not stocks and hence there are some limitations in day trading of crypto currency. So before you jump into the game and begin day trading crypto for a living, start knowing these factors mentioned below.
- Can lead to huge losses
Since some of the crypto currencies like Bitcoin have huge value, a slight downward movement in the market may result in huge losses. A small bit of negative information can plunge the market downward and once the market goes down, it is gone for the entire day. It gets no time to recover and your money starts losing in the process. After losing all your money, you will have to wait for the next big day when it comes as a profit to you. If you are a small or moderate investor, it becomes very difficult to recover the lost money in currency day trading.
- Has to take fast decisions
Most people prefer day trading because they want to see their money growing fast and do not want to see their investments bearing fruits in the long run. New traders do not know the in and out of the market and hence they always take wrong decisions in a hurry. By the time the new trader takes a decision, he is already late and seemed to have missed the bus. When the price starts falling the new trader do not know what to do in hurry and starts losing money.
- Extremely small profits are very frustrating
Now the discussion comes to the point of profit. You may make a profit, but the amount will be too low. Hence a day trader in crypto currency makes a small profit. Sometimes the profit amount becomes so low that it really becomes very frustrating. Most people do not invest huge amount of money and hence it is very difficult to earn huge profits in trading on a daily basis.
Day trading can work if you know certain steps like hedging where you can invest your money in two different assets.