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We recently published a list of 10 Best Day Trading Stocks To Invest In Now. In this article, we are going to take a look at where MicroCloud Hologram Inc. (NASDAQ:HOLO) stands against other best day trading stocks to invest in now.
Over the past few years, retail traders have penetrated the stock markets across the world, challenging the dominance of institutional investors in this domain. These traders often engage in day trading, the practice of buying and selling financial instruments within the same trading day to capitalize on short-term market fluctuations. However, despite the self-proclaimed success of these day traders, latest data shows that the reality may actually be quite different. For example, a recent report by financial news platform Unbiased notes that the majority of day traders face significant hurdles in achieving consistent profitability. A study quoted in the report claims that almost 40% of day traders abandon their pursuits within the first month, and only about 13% continue trading after three years. Moreover, a mere 1% manage to sustain long-term success over a five-year period.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
Data from the Financial Industry Regulatory Authority (FINRA) from 2023 reveals that 72% of day traders experience financial losses within a single year. Even among proprietary traders—those trading with a firm’s capital—only 16% report profitability, and a scant 3% earn profits exceeding $50,000 annually. Such numbers do not inspire a lot of confidence, and day traders thus employ a variety of different strategies to navigate the stock market. One of these is called breakout trading, the practice of identifying key price levels where significant movements are likely to occur. Per a study conducted by the brokerage firm Tradeciety, this strategy has a success rate of around 30%, indicating that while there are opportunities to capture short-term momentum, the majority of trades may not yield the desired outcome.
Another popular day trading strategy is trend-following. This generally refers to the practice of capitalizing on established market directions. The Tradeciety study claims that the success rate of this stands at about 20%. Despite the application of these strategic approaches, achieving consistent profitability is a challenging task for day traders. In this context, effective risk management is crucial for these traders to mitigate potential losses. The traders, around 88% of them, thus use stop-loss orders, which automatically trigger a sell when a predetermined price level is reached, thereby limiting downside risk. Nearly 62% of traders also employ position sizing strategies, determining the appropriate amount of capital to allocate for each trade based on risk tolerance and account size. These practices are geared towards preserving capital and managing exposure in a volatile market.