Daily Market
“Daily Market” (aka Day Trading or Daily Trading or Day Market) is an environment which allows the buying and selling of goods, services or financial instruments on a daily basis within a same trading day, such as – Bond Market, Stock Market, Commodities Market, Consumer Retail Market etc. Daily Traders or Day Traders speculate the buying and selling price of a security. Day Traders can make several buying and selling of a same security or different securities on a certain day to make money.
For example – Let’s say two hypothetical companies are H-1 Ltd. and H-2 Ltd. A trader Mr. X can buy the 1000 shares of company H-1 Ltd. just after market opens and make a small return by selling 1000 shares just after a few minutes through price fluctuations. And again Mr. X buys the same company H-1 Ltd. with 1500 shares and 100 shares of company H-2 Ltd. in the first half of the same market day and sells all the shares of both companies with a small profit in the second half before market closing on the same market day (trading day).
The main aim of day traders is to earn profits through short-term price fluctuations. Traders close all positions on same day before the market close. However, daily market is more volatile & riskier, and prices of securities changes rapidly, but it gives better opportunities with short-term price changes. Traders should have understanding of risk management, and they should place a stop loss to avoid a major loss.
Daily trading is much riskier than the long-term investing. An individual has to wait for a long period of time to obtain a return in case of long-term investing, but day traders close their positions before market close on same day. They don’t wait for a long time like long-term investors. They obtain the results of their trades on same day.
Advantages of Daily Market
- There is no need to wait for a longer period of investment time to obtain the results unlike the long-term investing.
- Day Trading comprises higher risks as well as potential higher returns.
- Daily traders mainly emphasize on technical analysis rather than fundamental analysis.
- Traders can make more money with appropriate strategies in a volatile market.
Challenges of Daily Market or Day Trading or Day Market
- Higher experience, real time information, risk management ability and emotional control are necessary to be a successful day trader.
- Traders must have the ability to make rational and quick decisions in an uncertain environment.
- Traders must have the understanding to figure out the market’s next move. Traders should also have knowledge of advanced tools and techniques.
- Day trading is highly volatile. It requires constant market watching during market’s trading hours to make a deal on a right price.
SAFE and Convertible Notes?
SAFE and Convertible Notes, a startup business would deal with all these words when they are looking to get Venture Capital funding. SAFE and Convertible Notes are the agreement types that is made between business and investors.
SAFE
SAFE stands for “Simple Agreement for Future Equity”. It’s one of the financial instruments which is widely used by startups for their early-stage funding through investors. SAFE allows startups to raise immediate fund without issuing equity shares immediately.
It allows investors to take a stake in a startup company through equity at a future date. SAFE is different from loan, as it doesn’t earn interest and doesn’t have any maturity date. SAFE opens doors for investors to earn a huge return with lower initial investment into a startup, as investors may earn higher return if the startup succeeds. Investors have the facility to stay invested or exit after the conversion of SAFE into equity.
Convertible Notes
Some investors invest into new companies or startups at very early stage when startups need and seek seed funding. At this stage, startup companies are not ready for their valuation. These startup companies may raise fund as a short-term debt from the investors which will be repaid by the companies to investors with company’s equity rather than principal and/or interest amount.
If company do well then investors can make a higher return. Wise investors invest only those startups which have a high potential for future growth. If startup company grows then investors can make huge money with their investment than interest on debt. Convertible notes are very high-risk investment but may reward with higher returns.
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