WHAT IS DAY TRADING: An introduction
Day trading is defined as the buying
and selling of a security within a single trading day. Also called as “Intraday”
This can occur in any marketplace but is most common in the foreign-exchange (forex)
market and stock market. Typically, day traders are well educated and well funded.
They utilize high amounts of leverage and short-term trading strategies to capitalize
on small price movements in highly liquid stocks or currencies. Day traders serve
two critical functions in the marketplace - they keep the markets running efficiently
via arbitrage and they provide much of the markets' liquidity (especially in the
Search "day trading"
on Google and you will see why there is controversy! The profit potential of day
trading is perhaps one of the most debated (and misunderstood) topics on Wall Street.
Countless internet scams have capitalized on this confusion by promising enormous
returns in a short period. Media continues to promote this type of trading as a
get-rich-quick scheme that always works. There are those who engage in this type
of trading without sufficient knowledge, however, there are day traders who are
able to make a successful living.
Many professional money managers and
financial advisors shy away from day trading, arguing that in most cases the reward
does not justify the risk. They often cite that no day trader is world renown, whereas
icons like Warren Buffet and Peter are a testament to the success that can be attained
by more traditional forms of investing. Conversely, those who do day trade insist
there is profit to be made. Overall, the street remains divided on the issue. At
the very least they agree that day trading is not for everyone and involves significant
risks. Moreover, it demands an in-depth understanding of how the markets work and
various strategies for profiting in the short term.
We help people to gain fro
m day trading by sharing expertise and knowledge as it help to reduce risk.
Here are some of the prerequisites
to day trading:
Knowledge and Experience in
the Marketplace: Individuals who attempt to day trade without an understanding
of market fundamentals often end up losing money. So it ia always advisable to go
along with expert advice.
One cannot expect to make money day trading. Day traders use only risk capital,
which they can afford to lose. Not only does this protect them from financial ruin,
but it also helps eliminate emotion from their trading. A large amount of capital
is often necessary to capitalize effectively on intra-day price movements.
A Strategy: A trader
needs an edge over the rest of the market. There are several different strategies
that day expert traders like us utilize, including: swing trading, arbitrage as
well as trading news, among others. These strategies are refined until they produce
consistent profits and effectively limit losses.
Discipline: A profitable
strategy is useless without discipline. Many day traders end up losing a lot of
money because they fail to make trades that meet their own criteria. As they say,
“Plan the trade and trade the plan.” Success is impossible without discipline.