So you want to know how to day trade? Well the first step is to know exactly what ‘day trading’ is. A day trader, is a person who will buy and sell financial instruments. This means to play the stock market, or to work within currency markets. They are called day traders as they will begin to trade at the start of the trading day, but intend will close all positions by the end of trading, rather than continuing to the following day.
Institutional day traders once dominated the financial markets. Employed by banks and investment firms, the resources and capital which is available to an institutional day trader is large, and constant. Although there is the risk of losing, these day traders often take more chances, but they are experienced, and have advantages from their position, unlike the retail day trader.
With the internet now able to be a host to the financial market, retail day traders have become much more popular. These are day traders like you and I, who work for themselves, using their own capital. Now, retail day traders, are likely to be able to make a substantial profit, and some day traders will give up their jobs and are able to make a living by day trading alone.
When you begin day trading, it is best to look around and carefully form your own strategy. Some day traders will only trade during the first half hour, to few hours of trading of a day, while some will trade throughout the entirety of the day. Each have their own specific trading strategy, which they always follow.
One of these strategies is ‘news playing’. Day traders will pay careful attention to the news announced about stocks and shares. Buying as they see good news, and selling as they see bad news. Doing this in quick bursts can provide the opportunity for to make a lot of capital. However, the trend of the market, does not always follow the trend of the news, and this is usually a strategy employed by those who are more experienced.
People are often attracted to day trading due to the ability to buy a large amount of profit. However, it is important to remember that day trading is just like gambling, in fact day traders are often called bandits or gamblers. You can win big, but can lose big too. Find a good strategy if you are going to trade alone.
Author: Lonnie PrindleThis author has published 1 articles so far.