Page 8 - Trading #101 Course – Part One: Trading Basics

TRADING #101 COURSE – PART ONE: TRADING BASICS /2017-10-06

Table 1.1 Pros and Cons of Being a Day Trader and Being a Position Trader

Day Traders Position Traders
They close all positions out to They hold positions overnight
cash at night and use intraday and use longer time frame
time frame charts like the two- charts like the daily, weekly, and
minute and five-minute. Trades monthly. Trades can last a day,
can last from minutes to hours. a week, or months at a time.
Pros Cons Pros Cons
Have no Cannot Can capitalize Have exposure
exposure to capitalize on on overnight to overnight
overnight risk overnight risk risk risk because
because all opportunities; opportunities. trades can be
trades are all trades are held for weeks
closed out closed out or months at a
each night. each night. time.

Can have a Pay more in Pay less in Have to have a
smaller trading commissions commissions larger trading
account size because day because account size to
since risk traders place position accommodate
distance more trades traders place overnight risk.
between entry than position fewer trades
and stop-loss traders do. than day
exit is smaller. traders do.
Place more Day trading Position Place fewer
trades than requires more trading is often trades than
position skill and considered the day traders, so
traders, so experience to best time it takes a
they gain more be profitable frame for new longer amount
experience in a due to the and novice of time for
shorter period advanced traders them to gain
of time. psychology because there experience.
required to is more time to
manage fast- psychologically
paced wins process wins
and losses. and losses.

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