Have you ever heard of day trading? This type of investment is a good alternative for those who seek quick profits and like to follow trades on the stock exchange.
But is this an interesting option for your investor profile? Find out what day trading is, and how it works, and learn about the main benefits of this financial operation. Keep reading!
What is day trading?
Day trading is an investment strategy that involves buying and selling assets on the same day, in a short period of time. This means that you can buy shares and sell them in a few hours, but within the same trading session.
The main purpose of day trading is to profit from market fluctuations. As the value of the shares can be changed in a few minutes, it is at this moment that the investor can obtain considerable gains.
How does day trading work?
To exemplify how day trading works, consider that you bought a lot of shares at 10 am, worth R$20 each share. On the same day, at the end of the afternoon, the shares rise to R$ 25 and you decide to sell your lot.
Following the market fluctuations, you made a profit of R$ 5, right? This is how day trading works, with the buying and selling of assets during the trading day.
And attention: the opposite is also valid. If at the beginning of the day, you sell 10 shares of company X and, before the trading session closes, you buy the assets of the same company again, it is also considered a day trade.
It seems simple, but knowing the ideal time to perform this operation requires prior study and further analysis. How to identify the ideal time to buy or sell? How do you know that that particular asset can increase in value? These questions are fundamental to start investing in day trading.
What are the benefits of day trading?
Day trading is a great opportunity to generate profit from your investments. Here are some benefits:
- as operations are carried out on the same day, you gain agility, taking advantage of stock market fluctuations to profit quickly;
- it is possible to use investments in fixed income as a guaranteed margin (Tesouro Direto or CDB, for example);
- liquidity is daily, that is, it will be possible to withdraw the profit within 24 hours;
- It is possible to trade leveraged, that is, you only receive or pay the difference between the bid and ask prices. If you invest BRL 5,000 in a lot and then sell it for BRL 8,000, the only movement in your account will be this difference of BRL 3,000.
What are the risks of day trading?
It is important to point out that, although it is a good type of investment, day trading also offers risks, such as:
- big losses: in the same way that it offers a great opportunity for profits, it is possible to suffer big losses. Without analyzing the charts and indicators properly, it is possible to lose money in operations;
- The stock market is very volatile, which can be challenging, especially for beginners. Day trading requires analysis and basic notions of the financial market. It is worth studying a lot of the characteristics of fixed and variable income.
But even if it presents risks, that doesn’t mean you can’t try! The important thing is to have a financial reserve and study hard before venturing out as a day trader. A tip is to follow the series on the financial market to find out more about this universe.
How do day trading taxes work?
As with any investment, day trading has taxes that must be considered. To plan ahead and not have any surprises, know the fees involved!
Income tax
In day trading, there is a percentage of 20% on the profit of the operation, without the brokerage fee. The withholding rate is 1%. This retention is known as “snitch”.
To collect taxes, the trader himself must pay the Federal Revenue Collection Document (DARF) by the last business day of the month following the profit.
brokerage fee
Anyone who uses an investment broker must pay a percentage amount for each purchase and sale contract. This fee is called brokerage.
custody fee
Generally, the custody fee is charged by B3 on the total value of investments. However, some brokers do not pass this value on to customers. So, it will depend on which company you choose to carry out your operations.
ISS
There is also the service tax (ISS), which is levied on top of the brokerage fee.
As you have seen, there are several advantages to operating as a day trader. Making this type of investment can be a great opportunity to increase your income and make more profits, ensuring a greater financial reserve.
Thanks for reading this article by ExtNext, hope you will learn something about Day Trading
