Chasing Day-Trading Profits During The Pandemic May Not End Well For You
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Stuck at home during the pandemic lockdown has led people to become innovative with their cures for boredom. More and more people are indulging in stock market trading for entertainment and profit.
Financial experts highlight concern for those individuals who do not have enough money or knowledge to overcome the losses that stock trading may bring them.
Since the spread of the coronavirus pandemic, day trading has become increasingly popular. A dramatic increase in activity was noticed in the first quarter of 2020 as compared to the entirety of 2019, reports Cerulli Associated. Websites that provide information on the basics of day trading are receiving increasing traffic, TD Ameridate accounts that the visits to its website have nearly quadrupled since the start of the year. Furthermore, a swell in the business of trading apps such as Robinhood is also observed.
The popularity of day trading can be attributed to various factors, says Lawrence Sprung, a certified financial planner. Many unemployed individuals consider it to be an easy method of replacing the lost income. Moreover, he says that people are trying to find new things to do with all the extra time on their hands.
Digital marketing strategies are also a chief factor in the increasing number of individuals participating in day trading. Many ads on “day-trading for beginners” can be seen on various social media platforms which people visit frequently, multiple times a day.
However, short-term plans for making large profits usually backfire on the users and leave them suffering from big losses or debts, financial experts say. Since people are obviously attracted to large gains, they tend to ignore the consequences that may come from wrong decisions.
Various examples of companies gaining or losing through day-trading during the pandemic can be found. For instance, the computer game company Nvidia was up around 95% from the middle of March to the end of August. On the other hand, Delta Air Lines lost more than a third of its shares.
It is suggested to invest in day-trading by starting on a small scale and only when one has enough funds to be secure in case of losses.
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