June 14, 2024

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Why You Should Leave Day Trades as Day Trades

3 min read

Day traders do all types of trading CFDs activities like buying and selling currencies, stocks, or futures while the trading session is open. Naturally, they close all their trades before the market closes. And if they are planning to hold a position overnight, they should carefully consider it. Two common reasons why day traders hold a position overnight are to make more profit or hope to get back what they lose. While holding a trading position overnight offers risks and disadvantages, there are also instances wherein you can say that holding a position overnight truly makes sense.

Things To Consider Before You Hold a Position Overnight

Forex, Stocks, and Futures, traders in these markets have a variety of factors to consider.

  • Changes in leverage
  • Risk Management
  • Strategic Reasons
  • Capital Costs

Successful Day Trading Strategies

If you have succeeded in day trading, you surely have set clear boundaries as to the perfect time to trade or when to take or profits as well as your losses. Most of the time, these boundaries can include the utilization of stop-loss orders, profit targets, and trailing stops. Once any of these orders fail to automatically close a trade at the end of the trading day, the position must still be manually closed.

Take The Losses At The End of the Trading Day

This one is a very important tip – if the trading position is at the losing end, you must never hold it overnight. Take the loss and start trading again the following day. If you are using a well-thought risk management protocol then you must not gamble with a single loss. If you hold a day trade position overnight, it is considered a gamble. This is because, once the trading market has closed, a new set of risks is being introduced.

Lock in Profits At The End of the Trading Day

If you want to earn more profits and you decide to hold a position overnight when trading CFDs, this act is also called a gamble. Take note that conditions change at the end of the trading day. It is true that gains can possibly increase but these gains can easily turn into losses overnight. Lock in your profits and trade anew the following day. Swing traders are the only trades that must be held overnight. You must carefully consider if you want a day trading or swing trading before you place your trade and not once the trade is opened.

You have joined day trading because you have decided to end your trade before the trading day ends. There shouldn’t be any exemptions to that. Unless you are originally planning to hold a trade overnight, your trades must be closed throughout the active hours of the financial market. Do not hold onto a position overnight and embrace the risks just because you are thinking of overpowering the market. Day trading is designed to be closed at the end of the trading day. Unless you have a very good plan in mind, you should just close your trades at the end of the trading day to avoid additional problems. 

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