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What is Day Trading?

 

Day trading is a style of trading that involves buying and selling financial products within the same day. You can watch online tutorials such as this video to learn more about the strategies and principles necessary to be successful. Traders learn how to leverage large amounts of money to take advantage of small price changes in highly liquid indexes or stocks.

Trading for Beginners

There are certain stocks that are ideal for day trading. The two things to look for in a stock are volatility and liquidity. Volatility measures highs and lows of the price of a stock, which is the range in which a trader operates. The higher the volatility, the greater the profit. Liquidity is how a trader can buy and sell a stock at a good price.

When you have selected the stocks you plan to work with, you can learn how to find the possible entry points. The three main tools for this are:

  • Intraday Candlestick Charts that provide raw analysis of the price action
  • Level II Quotes and ECN give a real time look at orders
  • Real-time news service that informs about stock movement
  • Common Strategies for Day Traders

  • Scalping is a popular strategy. It means selling the stock immediately when the trade becomes profitable. The target price is reached just after profitability is possible.

  • Fading is risky but it can be rewarding. When the stock has had a rapid move upward, the trader sells it short. The target price is reached when buyers start buying the stock again.

  • Daily pivots involve profiting from a stock’s daily volatility. The trader buys at the low price that day and sells at the high price that day. The price target is reached when it looks like the price has started to reverse.

  • Momentum involves trading based on stock market news or looking for strong trending moves that is supported by high volume. The price target is reached when the volume begins to decrease.
  • Day trading may seem complicated at first, but with the right online tutorial from companies such as Online Trading Academy it is quite easy, and you could be on your way to making money on the stock market. The instructors are clear and patient and make sure you understand the process, so you can decide if day trading or any other kind of stock market trading is for you.

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