Day Trading
What is Day Trading ?
It is perfect for the short term intraday trader, who would like to hold on to the position for a few minutes to few hours with a view of square their position before the end of that day.
- Day Trading involve taking a position in the markets with a view of squaring that position before the end of that day.
- A day trader typically trades several times a day looking for fractions of a point to a few points per trade, but who close out all their positions by day’s end.
- The goal of a day trader is to capitalize on the price movement within one trading day.
- Unlike investors, a day trader may hold positions for only a few seconds or minutes, and never overnight.
Day trading could be further subdivided into a number of styles, including :
Scalpers
This style of day trading involves the rapid and repeated buying and selling of a large volume of stocks within seconds or minutes. The objective is to earn a small per share profit on each transaction while minimizing the risk.
Momentum Traders
This style of day trading involves identifying and trading stocks that are in a moving pattern during the day, in an attempt to buy such stocks at bottoms and sell at tops.
Advantage of Day Trading
Zero Overnight Risk
Since position are closed prior to the end of the trading day, news and events that affect the next trading day’s opening prices do not effect your portfolio.
Increased Leverage
Day Traders have a greater leverage on their trading capital because of low margin requirement as their traders that are closed in the same market day. This increased leverage could increase your profits if used wisely.
Profit in any market direction
Day trading often will utilize short selling to take advantage of declining stock prices. The ability to lock in profits even as markets fall throughout the trading day is extremely useful during bear market conditions.
Day Trading Tips
- Buy Near Open Price,
- Check Buying volumes,
- Check derivative Status,
- Wait for the target price to buy,
- Strictly maintain Stop Loss,
- Down wait for huge profit in single share/stock.
“Get satisfied in small profit and do multiple trades”
In day trading, you could forecast eh move of the market using statistical tools. If you take a proper training on stock day trading, you could minimize the risk based on mathematical analysis unlike the
instincts working in any of the gambling games.
Do not consider day trading as a tool to ‘get rich quick’ or ‘earn million overnight.
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