401(k) Trading is supposed to be an ultimate long term investment plan. For most investors, it exists for decades however, there are financial advisers who claim that they can help you to manage the retirement plan over short term. It is advisable to avoid short term trading even when the next trade price is predictable. In other words, that can be viewed like “gambling”.
Here are a few considerations before investing 401(k) in day trade:
- Other high profiled companies like the Wall Street firms have the best facilities and professionals to win the best margins. As an individual, you have scarce resources and exposed to high volatile markets exposing you to high risks unlike bigger companies.
- The day trading strategies have changed. Traders are using arbitrage and high frequency algorithms to succeed.
- Day trading is more of a limiting factor compared to stock market. There are compounded dividends paid on regular periods.
401(k) Trading is legal investment but at the end of the day one has to decide what to do with their retirement money. Higher risks that be a waste of time and resources or the other option.