What is Day Trading?
Traders who enjoy the most success in day trading, regardless of whether they in it for a living or for some extra income on the side, generally have solid trading strategies and the discipline to stick to their trading plan.
Keep in mind that day trading is a very competitive field. In order to succeed, you need to maintain focus on a set of strategies which you can implement immediately, without hesitation. Remember, a proven, strategic trading plan can give you an edge over the rest of the market. You will not get rich on just a single trade.
What is day trading?
Day trading is the practice of buying and selling financial instruments throughout the day. As the day progresses, prices will rise and fall in value, creating both the opportunity for gain and the possibility of loss. Day trading is the trading of financial instrument where buying and selling is done on the same day before the market gets close, hence got its name Day Trading. Day trading is also known as intraday trading. Traders who participate in day trading are called day traders or active traders. It is most popular among traders due to high returns. This type of trading involved high risk and a day traders have to make fast decision depending how market is moving and hence not advised for the beginners.
Strategies for Day Trading
We hear a number of times that day trading people loose lot money though they perform better than others. The reason behind this may vary from person to person, like fear, greed, emotions, lack of knowledge etc. Therefore it is very important to follow proper rules for better results not only here but in every field of life. Below are few of the important strategies a day trader must know:
- 1. Good Knowledge: To be a good day trader it is must to have good knowledge about technical analysis and good strategies and the most important is to interpret both into some meaningful information.
- 2. Book losses like profits: Don't become greedy to book profit, assuming it will increase, similarly don't wait for the market to turn around to book losses. Play safe and always determine profit and stop objective before entering a trade.
- 3. Patience and disciple is the key for a successful day trader. Most of the day traders lose money because they lack above mention discipline and play emotionally.
PLAN YOUR TRADE
Successful traders know that trying to hit a lucrative home run on just one trade is a sure way to get burned. The key is consistency. You need to devise a solid strategy that produces consistent trading profits, and you need to learn and adapt as your experience with day trading grows and evolves.
If you want to succeed with trading, then you must invest both time and money to acquire the knowledge that you need the discipline to follow your trading strategy.
Types of Trading Style?
There are different types of trading styles a trader can chose depending on its personality and computability, but the ultimate aim of all type of trading is to make profit. Based on the duration between buying and selling of the financial instruments trading styles can be categorized into:
- 1. Day Trading (same day)
- 2. Short Term Trading (1 day to few weeks)
- 3. Medium Term Trading and (few weeks to few months)
- 4. Long Term Trading (few months to year/years)
Beneifts of Day Trading - With Almost Zero Risk Factor
In the stock market, risk and benefits come hand in hand; one can never guarantee a profit or loss in the process. Therefore, many people who are unaware of the entire process hesitate to get into the trading system. Though there are uncertainty and high chances of failure in the first attempt, there are advantages as well associated with the technique of trading. These include the following:
- 1. Zero risk factor: Since the market closes on the same day, new and updates on stock won't affect the stock.
- 2. Brokerage value: The brokerage cost for day trading is low in comparison to delivery trading
- 3. Short sell: A trader can sell financial instruments first and buy later, which is called short sell