Day Trading - An Introduction

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See how quickly $1000 turns to $1 Million trading penny stocks! http://tinyurl.com/87meyoc

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Day Trading - An Introduction

  1. 1. ==== ====Look at & Copy this trading strategy which converts $1000 into $1M+ in 38 trades -http://tinyurl.com/87meyoc==== ====Day trading is the practice of active buying and selling of the stocks, options, futures andcurrencies within a trading day. All trades are completed within a day so that after the closing ofmarket the day trader do no hold any open positions and therefore are not subjected to anyovernight risks. The traders trade against very small changes in price of the financial instruments.Day trading is usually a vigorous trading activity requiring high concentration and time duringtrading hours.Day traders can be grouped into two broad categories as scalpers and momentum traders.Scalpers trade in large quantities completing each trade within seconds or minutes. Most scalpersare usually large financial firms or investors like institutional traders. Momentum traders areusually individual traders who trade according to the stock market trends. The trading volume ofmomentum traders usually depends on the market condition. Some other popular tradingstrategies include range trading, news playing and rebate trading.Day trading can be considered as an offspring of high speed electronic communication networks.Most day traders today trades markets from a distant location such as their home or work area.They use trading software, the direct access trading platform, installed in their computerconnected to internet to execute trades in real-time. In order to qualify for the trades, the tradermust maintain a margin in the corresponding market. It is the day trading broker who maintains themargin for the trader and provides the direct access trading platforms. Although there are web-based trading platforms available, they are not suitable for day trading.The most important thing, other than the money, trading system and market account, that a daytrader need is the market information. Market data enables day traders to pick suitable products totrade. Day traders need live or real-time market quotes as a small delay in information can causethem huge loss. It is the trading system that they use serve for this purpose. Advanced systemsprovide these information as graphics and are usually have alerts and triggers to automate trades.Day trading systems also use technical indicators and various mathematical tools to facilitate thepicking of stocks, futures, currencies, etc.As told earlier, there are a variety of products available for day trading. The most popular ones arethe stock and the forex currencies. Others include options like stock options and futures options,and futures like currency futures, stock futures, stock index futures and commodity futures. Daytrading facility is available for most stock, options and futures market, but note that most brokersoffers services for limited markets/exchanges. The trader also must be keen to choose marketsaccording to the product they are trading, their financial status, the brokerage they are affiliated to,the trading system they uses, and their geographical location.The advantages of day trading include high profit making chance, no overnight risks, high
  2. 2. leverage, rapid returns, no margin interests etc. The disadvantages include higher chance of loss(especially to new traders) and the requirement of high concentration levels and time. Therequirement to payoff interest on margin and transaction costs can make the situation moreserious. It is estimated that over 80% of day traders have to afford loss.Praveen Ortec works for NobleTrading.com, a discount broker providing online stock day tradingon 4 different online day trading systems. Checkout this online broker comparison table.Article Source:http://EzineArticles.com/?expert=Praveen_Ortec==== ====Look at & Copy this trading strategy which converts $1000 into $1M+ in 38 trades -http://tinyurl.com/87meyoc==== ====

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