4 Disadvantages of Internet Day Trading

Getting involved in Internet day trading has become a popular way to invest in the stock market for many individuals. Although you could potentially make some money doing this, there are a few potential drawbacks to this type of trading. Here are some of the disadvantages of Internet day trading.

1. Commissions

One of the biggest problems with trading online is that you will have to deal with commissions. Individuals who get involved with online trading typically make numerous trades everyday. When you do this, you will have to pay a commission to your broker every time you trade. Even if you are working with a discount broker, this cost can add up significantly. With these costs, you have to make additional profits from each trade in order to make up for them. Individuals who use long-term trading strategies do not have to be concerned with this problem as much.

2. Fast-Moving

Another potential disadvantage of Internet day trading is that it is extremely fast-paced. In order to be successful in this game, you need to be able to place your trades when an opportunity presents itself. If you are even a few minutes late, it can end up costing you profit. One of the big problems with this aspect of trading is that you will have to deal with broker execution. When you place your trade, it may not actually go into the market for several seconds, or minutes. This is due to the fact that your broker has to take to trade and get it into the market for you. When this takes a long time, it can end up costing you money.

3. Difficult to Predict

Another one of the biggest problems with Internet day trading is that it can be very difficult to predict what will happen on such a short time frame. Many experts claim that it is impossible to predict what the market will do on a short-term basis. Many of the most successful trading strategies are based on long-term outlooks. When you are trying to make small profits on fluctuations in the market, it can be very difficult to predict what is going to happen.

4. Large Time Requirement

Getting involved with Internet day trading is something that will require a good portion of your time. Many people have the impression that you can simply spend a few minutes looking at some charts and then make a great deal of money. However, if you want to be successful with day trading, you have to devote quite a bit of your time to it. You will need to spend some time learning how to trade and then you will have to be able to have access to your computer during market hours. If you have a full-time job, it can be difficult to get involved and keep up with the fast pace of trades.