Day trading involves selling and buying of the stock or the financial instruments in a day before the market closes. The day traders are speculators, not interested in the position of the company in the long run, but take advantage of the daily price fluctuations in the market. Though the trade involves a few rough patches, it can turn out to be a lucrative career if one is prepared for the trading. With the advent of the internet, it has become easier for traders to step into the day market.
Day trading is highly risky but surely can turn into a lucrative career. In laymen’s terms, day trading involves the selling of the stock and taking advantage of the daily market. The day traders never hold on to the stock and sell the stock before the closure of the market. This trading took off during the early 1990s and made it into the mainstream soon.
Day trading differs in the Stock market and Forex. Both of the markets are poles apart from each other. The stock market requires higher capital for day trading but on the contrary, Forex is lesser. You can start trading as low as $50 in Forex but in stocks, you would require a capital of $25,000 minimum to start the trade. Forex has been considered the gateway to the financial market and is quite helpful to the traders who want to learn the basics of the market.
Broker and research:
There is a wide variety of trading markets on the internet and it all comes to you what you want. You need to spend some time and understand your requirements. That’s the first thing you should so. With a computer at your dispense, you should be able to understand the best market for you. You will also need a Broker that facilitates your trade. You surely will want to focus on the low-commission brokers but paying an extra few dollars won’t be a bad idea especially the fact that Brokers can get you out of computer meltdown. Major banks will charge you more but you shall be able to seal a deal with the small brokers.
When to trade:
Day trading is your personal affair where many of the traders will start trading at the exact same time every day. You may go for a full session but day traders are only players of a few hours. For stock, the best hours are the initial hours and the last hour of the day whereas in the Forex market, among the 24 hrs that it trades, 7 AM to 10 PM is considered the best and 1 AM and 12 PM are regarded good for EURUSD.
Now that you have made your mind, one of the important tasks is to understand the trading thoroughly and figure out a pattern in the trade that will work. You don’t need to read a hundred books or solve any complex problem but determine a business pattern that is frequent in the trading. You need a strategy that will work for you. Open a demo account and start practicing. Implementation and practicing are two different things but practice will help you to understand the complexities of the market. Your strategy might work for you and it might not work for the other trader. The demo market can’t mimic the actual market and the strategy will vary in both of the markets. The best advice would be to choose a market that you can afford and start low.
Determined day traders will never lack the skill. You need to develop a habit of chart reading and in-depth market analysis. You need to have sufficient capital to go and sustain the market. The traders who work for an institution are entitled to the trading desk and other resources but people who trade alone or from other people’s money are devoid of it.
Day trading is a lucrative career for those who know how to do it. If you are willing to choose the occupation as a full time, it would require you more than capital. The understanding of the market is a must and analyzing the complexities and daily price fluctuations in the market goes a long way in the trading. Although trading has remained the activity of a few in the past with the revolution on the internet, it has become a much more viable option for new traders trying to make their mark in the market.