Technology has changed the face of stock market trading by leaps and bounds. Whether it is an analysis of data or reporting transaction data, the electronic network has made impactful changes in the way the world-wide money market functions. Day trading has found a special space in the investment industry. In simple terms, day trading is the practice of buying or selling securities within a single day.
Traders who enter the stock market to engage in intra-day businesses usually involve themselves in a regular practice of transacting in one or more security positions diurnally. To learn more about lucrative methods of day trading, visit website and make the best of your stock market investments. In this trading form, no position, be it long or short is held overnight and positions taken are based on their analysis of the stocks within the trading period only.
Strategies for intra-day trade
Experts site a few strategies that can make your transactions lucrative.
Scalping is a strategy where traders sell their securities as soon as they hit a profit mark. This includes all overheads, commissions, and interest costs. Scalping works well when you are prompt at curtailing any loss. This means the trades you invest in also need to be profitable.
Another strategy is fading where traders start selling their short stocks as they observe a rising trend. This is typically done when they anticipate other investors to take a long position. Wondering how does this work? Well, the disparity in the buying and selling drives the stock downward.
Sometimes traders short sell their stocks at a high price and then buy it back when the price is low. This is known as daily pivots.
Also, you’ll find traders invest in a stock that shows an upward trend with increasing volume and sell off when the price starts falling with its volume. This is done with the assumption that the trend would continue even after they take a long or short position. This strategy is referred to as momentum.
Are those strategies enough to ensure higher success rates in your intra-day trading? Along with the tried and tested methods, you might need a couple of tools to make it profitable. Find trading strategies for beginners at https://www.investopedia.com/articles/trading/06/daytradingretail.asp
Tools for trading
So, do you have the money? Yes, if you are trading for a living and want to ring in more profits, you can’t be buying or selling without money. Unless you have substantial capital you run the risk of losing what’s not budgeted.
Margin accounts can work as a favorable tool when you engage in short-selling your shares. When you purchase stocks, the risk is low as you know that stock price cannot go below zero. Thus, the broker will loan you funds as per the legal regulations so that you can either acquire or maintain your position.
The next thing you would need is the supportive infrastructure to get started. Be it the hardware setup such as computers, a stable internet connection, or the software that you need to stay updated round the clock.
As an active day trader can use an ECN (electronic communication network) so that you don’t have to pay a commission to a broker for every transaction. You can register with the approved ECNs. You will have to pay fees for the membership.
Additionally, as a full-time intra-day trader, you must monitor real-time news from all possible sources to stay abreast with information that might affect your security positions as well as the overall market.
Note that regardless of the capital market you buy or sell in, the usual principles of intra-day trading would apply. Whether it is the stocks, options, currencies, or commodities market, the investment criterion refers to the price volatility and not its value.
The thumb rules:
– Trade on the opening and closing positions every day and don’t hold them overnight.
– Stick to transacting based on your technical analysis.
– Buy or sell to make most of the anticipated price movement.
– Focus on the time you spend on buys and sells. Most importantly, ensure to keep a close watch on the market during the opening hours.
– Knowledge, experience, and discipline are the keys to success.
Advantages of intra-day dealings
Of course, you might be able to reap big profits but it’s not just about one-time money. Sustainability can be assured when you have a way with your emotions and can overcome the building pressures.
If you are a self-employed trader, you can enjoy the advantage of working independently without being answerable to anyone. Moreover, if you are successful at earning profits, it can boost your emotional health. Delivery Vs. intraday trading; find out which one is better for you!
What could be the potential risks?
While there are several benefits of day trading, you might have to be prepared to handle a score of financial and emotional risks.
An obvious area of possible loss one could face is a capital drain. The initial fees, the upfront costs, such as that of hardware setup, software installation, ECN fees, overheads, interest fees, communication costs, etc. all make up a part of the total capital you wish to invest in trading.
If you aren’t following the market activities at its pace, you could lose profitable opportunities. Similarly, if you turn up late for a transaction, you might end up incurring a loss. However, it’s crucial to use your sensibilities when trading in the stock market. Psychologists say that trading isn’t very different from gambling as both can be addictive if appropriate measures aren’t taken.
Using tools such as stop-loss, doing an in-depth survey of the market, and staying updated with events and news are the basic things you need to bear in mind as a day trader in the stock market.