What is Day Trading?

 

Recent times you have been heard about day trading from your friends, relatives or some place you have been visited or maybe at YouTube. By hearing to this things you could have thought what is day trading actually and how does it works. Whether is it safe to invest or is it a risky one?

Almost majority of people you have discussed with who are into day trading have been suffered a huge loss or a tragic ending.

At the first place they are so eager that they can quit down their job and start buying and selling stocks on a daily basis so that they can earn more income daily. These thought approaches to each and every person who have heard about day trading.

Now lets get closer to what day trading is?

What is Day trading?

Day trading refers to short-term trading in the stock market, typically defined as buying and selling stocks within the same day, but can also be done within a few hours or even minutes. The goal of day trading is to make small profits on many trades. Day traders rely on fast execution, which allows them to make more trades in the same time period than an investor who buys and holds stocks over longer periods of time. While no one can predict the future, careful analysis of stock trends helps day traders make informed trading decisions based on trends that might repeat in the future.

Understanding Intraday Trading

If you’re new to day trading, here’s a quick breakdown of how it works. You open up an account with an online broker that offers stock and options trading, which allows you to trade on margin. You can buy and sell shares at any time during a 24-hour trading period called a trading day. Keep in mind that only professionals are legally allowed to day trade; if you’re thinking about buying shares just for fun, check out your brokerage firm’s policy first. Here's what happens when you day trade: Say I want to buy 100 shares of Facebook (FB). First, I'll place a market order, meaning I want my order to be filled immediately at the best available price. Before 9:30am EST, Facebook is trading at $50 per share so my order will execute immediately—it will be filled by another investor who has also placed a market order before 9:30am. Then, after 9:30am EST, when there are many more traders available—more competition in other words—my trade could be filled with fewer shares or even executed much later in time because there would be so many investors trying to get their orders fulfilled at once.

Types of Day Traders

There are three primary types of day traders: Intra-day traders : These traders typically trade from one to six times a day, looking for intraday patterns and trends. They might try to catch a stock as it’s moving up and then exit just before it levels off. Intra-day trading takes nerves of steel—there’s no time to recover from mistakes, since trades must be closed before that day’s close. Swing Traders : Swing traders often trade several times per week and hold positions overnight until they’re resolved. Market timers tend to fall into this category. Swing traders like their positions held over multiple days so they can focus on other things while their position develops. Position Traders : This type of trader holds a position for an extended period (weeks or months) in hopes of capturing long-term gains. It’s more like traditional investing than short-term trading. Many investors who don’t have tons of experience still opt for position trading because it requires less risk tolerance than intra-day or swing trading; however, holding stocks longer means you could potentially miss out on major gains if your analysis was wrong in some way.

Becoming a Successful Trader

To make money as a day trader, you need to be willing to take risk. If you don’t have a large account with high-risk capacity, day trading isn’t for you. With that said, here are three steps to becoming a successful trader:

1) Find a niche and master it; 

2) use automated trading tools and software; 

3) keep your eye on results over time.

 Don’t fall into temptation by buying more stocks than you can afford in your account and expecting overnight success. The stock market is like any other industry—it takes work and dedication to achieve success. In other words, treat trading like a business venture rather than an if I only knew then what I know now get rich quick scheme. Remember, it will take time to see growth in profits! Also remember there's always learning opportunities when starting out on any new career path...keep an open mind about things!

Tips for New Traders

To learn how to start day trading, you need to understand how it works. There are no tricks or gimmicks here—day trading is just another way to participate in stock markets, albeit a much more active one than simply buying and holding over long periods of time. To be successful at day trading, you need to know what stocks are worth looking at during different times of day, have a strategy for analyzing stocks and making predictions about their future price movements, and have an effective system for placing orders and conducting other trades. The only thing that sets day traders apart from normal investors is their willingness to buy and sell frequently; they look at short-term trends while most people invest based on long-term forecasts.