What is Day Trading

Day trading, as the name implies only works for a single day. The next day, a new trade is placed. In earlier times, only those people were able to do day trading who were associated with big financial organisations or trading companies.

WHAT YOU WILL LEARN

  • Introduction of day trading
  • Analysis of day trading

SKILLS YOU WILL GAIN

  • Day trading
  • Advantage of day trading
  • Techniques of day trading

Some traders who are new to the trading business, are eager to earn a big chunk of money in small time duration.

So for those who are passionate about trading and earning money with their market knowledge, day trading is the best option.

Day trading, as the name implies only works for a single day. The next day, a new trade is placed.

In earlier times, only those people were able to do day trading who were associated with big financial organisations or trading companies.

But with the advancement in technology, and thus, the internet, it has become relatively easy for an individual to do day trading. It is also known as active trading as one has to close his position by the end of the day.

Day trading is best for the passionate traders who do trading, not for just fun but their livelihood.

What is day trading

Day trading is the trading technique in which a trader invests his capital for a single day in different assets and make a profit due to market volatility and closes his position on the same day.

It is also known as active trading as whatever be the losses or the gains, one has to close all the positions by the end of the day.

Day trading involves high leverages, and the trader should be highly disciplined to achieve its goal on a single day.

A day trader is required to know all the technical indicators and has done fundamental analysis before investing in any commodity or stocks.

Because it becomes quite challenging to change strategy for a day trader as the period of trading is just a single day.

A day trader has to be argus-eyed when it comes to any news. As the news directly influence the market sentiments and a day trader can make a profit from even a small fluctuation.

Techniques employed in day trading

  • A day trader places several trades in a highly liquid market and makes small profits from them to collectively gain a large profit. This technique is a scalping technique.
  • Selling and buying of stocks and commodities are governed by support and resistance levels.

As the prices move towards their extremes, one can make his mind whether he wants to buy a commodity or sell a commodity. It is also known as range trading.

  • In day trading, most of the trade is governed by the news and market volatility. The most liquid market is the most volatile and the profit is also significant.

There are certain benefits, as well as limitations in being a day trader; let us discuss them one by one.

Advantages

  • No need to worry about overnight market fluctuations and risks on earnings.
  • Compounding money is very fast as one can use his money earned on the previous day to invest in a new trade the next day.
  • On cash positions, there is interest awarded to the trader. I.e. one can earn interest if he is closing his position on cash. This interest is available on specific trades, not on all.
  • One can make quick money using leverages. Leverage means one can buy additional shares of a company with a brokerage account. For example, if a brokerage company is providing a brokerage of 5:1 and a person having $10,000, then he can buy shares up to $50.000.

Using brokerage in day trading is extremely dangerous as one may lose all of his money as the share falls.

  • While performing day trading, one need not work all day. Means if a day trader has achieved what he desired, then he can take off for the rest of the day.
  • A day trader need not have to own an office; instead, he can work from anywhere in the world and enjoy his trading

Disadvantages

  • Understanding day trading is a stressful process as it employs a learning curve. Learning takes time, and there is no time in day trading.
  • The results that we desired are time-consuming.
  • A thorough analysis is needed before investing in any trade as it might not result in the preferred result at the close of the day.
  • One cannot control his emotion when his profile suffers a loss. As the price fluctuates, the feelings also vary and doubts on decisions.
  • A trader has to be disciplined as he places several trades on a single day, so he has to monitor all of them and make a trading plan accordingly. If the trades are not aligned with the trading rules that the trader predefined, then the loss is confirmed.
  • When a day trader plays high-frequency trading, then he is susceptible to losses.
  • In day trading, a trader can lose all of his money in a fraction of seconds if he does not employ any risk management plan like stop-loss orders.

Bottom line

Day trading involves all the trades to be performed on a single day. So one should be very careful in placing the right trade because one wrong decision can ruin all of your trading careers.

Make it your's..

40%

Started a new career

45%

Started own business

15%

Waiting for opportunity

Overall Ratings

0.00

0 Reviews

Submit your review
1
2
3
4
5
Submit
     
Cancel

Create your own review

Fx Learn Pro
Average rating:  
 0 reviews

Top Reviews on What is Day Trading

Enrollment

Achieve your

GOAL

with FX Learn Pro

& its all Free

Check some sets which we choosed for you
so you can compare best rated posts from
our site

Enrollment Form

Please fill the form below to start the course. Its Free forever and there are no hidden charges.

Password must be at least 7 characters long.
Password must be at least 7 characters long.
I agree with Terms & Condition

Frequently Asked Questions