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Rapid Rise in the Number of Day Traders Across the European Union

20 December 2020, 14:11 CET

Day trading is increasingly popular among a growing contingent of folks across the EU. It’s now possible to buy/sell stocks online and profit from winning trades.

Mobile phone graph - Image by Pixabay

Day trading is a unique vocation where trades are entered into (buy/sell orders), and closed within the same day. It is possible for trades to be held overnight, although this is less common. There is no question about the rampant popularity of day trading across the United States. The premier trading platforms in the US, including Robinhood, E*TRADE, Fidelity, Charles Schwab, TD Ameritrade, and other emergent trading platforms like StocksToTrade are cutting a swath with traders across the board. Such is the appeal of wanting to learn how to day trade that it has jumped continents, traversed oceans, and spread like wildfire in the majority of markets.

The phenomenon was born from the increasing liberalization of trading in the US, through the regulation of trading platforms and brokerages for retail traders. The erstwhile systems which governed trading activity – institutional brokerages – no longer control 100% of trading and investing activity.

FinTech has facilitated a shift away from legacy systems towards people-oriented trading software and brokerages. The result is a stunning new addition to the trading arena. A 'secondary market' has opened up comprised of novice traders intent on stamping their mark on this newfound vocation. The vast majority of new day traders have limited experience with the financial markets, yet they are having an outsized impact on volatility, liquidity, pricing, and profitability.

There can be no denying the rampant popularity of day trading in the European Union. It has been said that American technology brought day trading to Europe, and the Europeans have embraced it with open arms. Mention has been made of scores of traders who enter into stock trades with short or long positions, only to profit substantially minutes or hours later. These day trades are opened and closed within the trading day, hence the eponymous name.

How to Profit from Day Trading Online

There are several ways to profit from day trading – either by going long (a bullish prospect) on the stock, or by shorting the stock. Either option can yield profits, provided traders call it the right way. Of course, a trader's success hinges upon myriad variables coalescing at precisely the right time to yield a profit. If one element is off kilter, the trade fails and losses ensue.

Nowadays, the European trading scene is peppered with a new generation of day traders. Some of them have full-time jobs, others are making the switch to day trading as their full-time profession. It takes tremendous dedication, patience, sacrifice, and learning to master the art of day trading. There are scores of related, and unrelated factors coming into play, many of which will impact pricing of the underlying asset.

A growing contingent of European traders has taken to paper trading to better understand how the market works before trading for real money. This demo-trading system allows for a better understanding of trading tactics and strategies under real-world conditions. Day traders who use paper trading systems have zero liability, and everything to gain. It's best to maintain a journal of successful trades, and unsuccessful trades, for posterity.

Thanks to breakthrough technology in trading platforms and online brokerages, it is now entirely possible to build a viable financial portfolio based on a handful of daily trades, or perhaps dozens of daily trades. Of course, experts recommend starting small, with a limited number of stock options that a trader understands and can follow with ease. The moment the portfolio swells to include too many tradable instruments, it can get confusing and traders can lose their grip on proceedings.

Fortunately, the management of the day trading options is best undertaken by sophisticated trading software systems which can automatically buy and sell the underlying instruments at set prices. Buy orders, sell orders, take profit, stop loss, et cetera are commonly executed by day traders and their chosen software. Other proprietary systems such as the AI-powered Oracle by STT, are capable of screening markets for volatile stocks, making the process of selection that much easier.

European Regulations Differ from US Regulations on Day Trading

Of course, European regulations are different to US regulations vis-a-vis trading stocks. In Germany for example, it is illegal to short stocks, and in the United Kingdom, transactions costs are significantly higher owing to stamp taxes. In these parts of Europe, day trading is still in its infancy stages, but interest is growing rapidly. Fortunately, the focus remains on educating traders as to the functionality of day trading activity, courtesy of webinars, seminars, trading guides, trading videos, mentors, and articles.

Many tech companies are cramming into this heavily-populated space, to offer their trading platforms and online brokerage systems to an ever-increasing base of users. Interest is rising fast. Fortunately, European trading platforms are heavily focused on information for traders. Safety, security, and awareness of the potential hazards of trading are routinely highlighted to create an informed trader base. Day trading is now an integral component of the global economic ecosystem. It features prominently among traders who have recently been introduced to this option through the tectonic shift away from physical to virtual activity owing to the novel coronavirus.

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