Day trading

 3. Day trading

The strategy of short-term gains is called day trading. It requires a lot of working hours if you want to do it the right way. Day trading offers a great deal, could be riskier than hodling, but also requires a far greater time investment. It is focused on buying stocks or crypto or what you believe will prove to be a lower or higher price.

Anticipation of short-term movements, making a profit relies on the price moving in your favor. At which point you would sell your investment for a profit. The risk here is that sometimes the price will do the opposite of what you were expecting. The day aspects of day trading, relates to the short-term nature of the position you take. Day trading, it is just about taking trading positions for a few hours or days, rather than months or even years. As we said, the crypto markets are open 24/7, which means it is easy to adapt day trading on those markets. The case is different with stocks, as they are closed on the weekends and holidays.

Example

So, to understand day trading, let us see an example. Let us say that a big financial institution from the U.S. is going to be using XRP for their international payments. John thinks that this means the price of XRP will increase in the next few minutes. He buys 1000 XRP at a price of $0.2 for a total of $200.

Other people see the news and also try to buy XRP, causing the price to go up. An hour later, the price of XRP has risen to $0.25, and John has decided he wants to sell to make a quick profit. John sells all 1000 of his XRP for $250, totaling $50 in profit. In this example, the price moves in the direction Jimmy expected, and he was able to make a profit.

However, it could have dropped instead, or it could have waited too long before selling, and instead had losses.