Day Trading is the practice of buying and selling financial assets such as stocks, stock options, currencies, cash, equity shares, bonds, loans, or any other securities within the same trading day in which all carried positions are usually closed/square-off before the market close for the trading day. It allows traders or investors to make profit within the trading day. Traders who participate in day trading are called intraday traders or day traders.
Day trading generally refers to the opening and closing positions in financial assets at it is categorized above within the same trading day. It is used to take positions in a trading day and during the trading hours trader can closed his/her all positions at any time within the same trading day. It is supposed to be as gambling and speculation in which trader has to close his/her all acquired positions, no matter whether he/she is in profit or loss by the end of trading day.
In day trading or intraday trading system, traders can both either buy or sell according to the market nature whether it is bullish or bearish. When the market looks bullish traders use to buy first and then sell it to get profits, while on the other hand when the market looks bearish traders use to sell first and then buy stocks in order to get appropriate profits. However it requires lots of experience and knowledge of share market.
Day Trading Techniques: Intraday Trading Techniques provides a road map to traders by which day traders trade in stock(cash) market and attempt to make profits. Nowadays lots of stock trading course/education are given by different broking and investment advisory firms. Following are the techniques used to trade effectively in day trading or intraday trading:
1. Always follow the current market trend: Trend following is a day trading technique that helps to predict market nature and behaviour in various markets. By using this technique trader buys stocks which are assumed to rise, or fall in the expectation that the trend will go.
2. Scalping trading: Scalping is simply a trading strategy that attempts to make profit by the numbers of small price shares. It is generally referred as spread concept based trading. Sometimes it is known as chunking trading which allow to trade in small chunks.
3. Stock Volume and Market Volatility: Before going to take positions in day trading, a trader must look at to the volume of stocks and keep updations of market volatility as well. Volatility can be considered as one of the important factor to evaluate stocks for day trading.
4. Analyse Risks and Rewards: Day trading is a high risk trading game. It has lots of risk as well as high profits. Before investing in stocks a trader should analyse the risks and rewards associated with it.
5. Technical Aspects: In order to trade effectively in stock market traders need to take help from modern softwares and live stock charts. A trader may require to take help from stock advisor, and technical analyst to get stock reports and stock news.
6. Avoid Over-trading: A day trader should avoid to indulge in over trading, it may cause for loss, however sometimes it may lead towards profit.
Finally comes to the conclusion that the day trading is risky trading style, and a day trader must understand the risks associated with it. To trade effectively in intraday trading one should follow the appropriate rules, regulations and restrictions.
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