Day trading is tempting, but it’s a path paved with risks as much as it is with potential rewards. Traders may use options and futures contracts to capitalise on market mood swings in volatile sectors. Yet the risks are real and substantial, from rapid market fluctuations to the complexities of leverage, which can magnify both gains and losses.
Equipping yourself with tools like stop-loss orders can help manage the risks, but traders need to tread cautiously. Keep reading for a quick-and-dirty guide to the world of day trading.
Day traders target stocks with high volatility. If a stock is highly volatile, it means that its price fluctuates significantly over a short period. This is attractive for day traders as it presents opportunities to profit from these price movements. The best shares to buy now for day trading may be different tomorrow.
Below is a list of the highest volatility stocks at the start of 2024. This compilation is based on MarketScreener’s volatility index, focusing on global stocks with a market capitalisation of $100 million or more. For the most current information and a comprehensive list of these stocks, you can refer to MarketScreener’s website or similar financial information platforms.
| Icon | Stock | 1 year performance (October 2024) | 5 year performance (October 2024) | Link to invest |
|---|---|---|---|---|
 | NVIDIA (NVDA) | 227.09% | 2,800.11% | Capital at risk |
 | Lam Research (LRCX) | 14.79% | 215.36% | Capital at risk |
 | Intuitive Surgical (ISRG) | 87.29% | 173.14% | Capital at risk |
 | Intel (INTC) | -36.1% | -55.68% | Capital at risk |
 | Costco (COST) | 54.65% | 193.78% | Capital at risk |
 | Oracle (ORCL) | 62.39% | 222.25% | Capital at risk |
 | American Express (AXP) | 80.16% | 133.81% | Capital at risk |
 | Tesla (TSLA) | -8.59% | 1,194.69% | Capital at risk |
 | Alibaba (BABA) | -23.31% | -39.48% | Capital at risk |
 | Pfizer (PFE) | -6.99% | -15.43% | Capital at risk |
Day trading is essentially buying and selling stocks (or other assets) within a single trading day. The goal? To profit from short-term price changes in the market. Here’s a breakdown of some key terms and concepts:
Day trading is fast-paced and not for the faint-hearted. It requires keeping a close eye on the markets, making quick decisions, and understanding complex financial products.
To start day trading, you’ll want to make sure your broker allows you to use leverage, trade derivatives, and engage in options and futures trading. All of which can be pretty risky.
Selecting the right stocks is crucial for day trading success. Day traders usually look for stocks with the following characteristics:
While investing focuses on long-term growth and stability, day trading is all about short-term gains from quick market movements.
Investors typically hold stocks for years, collecting dividends and waiting patiently for the stock price to edge up. Day traders, on the other hand, buy and sell within the same day to exploit immediate price fluctuations.
Day trading requires constant market monitoring and carries higher risk. Traditional investing is generally steadier and less time-intensive.
Thinking about day trading? It’s an exciting way to make quick profits, but it’s also risky. You need to be smart about the stock market and ready to make fast decisions.
Remember, only use money you can afford to lose, because gains and losses can happen quickly. If you’re up for the challenge and willing to learn, day trading can be rewarding.
Just keep it simple, be aware of the risks, and maybe get some advice from financial pros. Also, keep in mind that your time has an opportunity cost. Are you really making more by day trading than you would at your 9 to 5 or in a side hustle?
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
This largely depends on whether you’re a beginner to day trading, or if investing in general is new to you. Typically, day trading is an activity reserved for experienced investors who already have a deep understanding of investments and the markets.
Many beginners make the mistake of diving into something like day trading without learning some investing fundamentals. Day trading can be much riskier and difficult to learn. It's well worth spending some time to educate yourself around long-term investing before you even consider jumping into this area, where you’re far more likely to lose money.
Day trading offers a chance for profit through fast-paced stock market movements. It’s engaging and educational, but also comes with high risks and emotional stress. While it might be ideal if you can manage the volatility and are ready for a challenge, you should never trade with money you can’t afford to lose.
Before diving into day trading, consider whether traditional, buy-and-hold investing might deliver you the same or even greater returns for much less effort. Also, keep in mind that every hour you spend day trading is time you could spend making income at your 9 to 5, or doing a side hustle.
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