Fundamentals of Being a Day Trader

I’M JUST LEARNING TRADING and I thought it will be good to share with fellow newbies what I have learnt so far.

In the past, trading was a job done only by individuals or rather professionals working in big financial institutions, trading houses and brokerages. However, technology advancement has made it possible for anyone to learn and start trading at the comfort of their houses and in this case,

“You can trade from the comfort of your home”

If done right, I have come to find out that Day trading can be a very rewarding job. However, it is very challenging to start and you should never give up unless you know when it’s the right time to give up as outlined in this article;

The Art Of Knowing When To Give Up

What is Day Trading?

Day trading is a form of speculation in securities in which a trader buys and sells a financial instrument within the same trading day, so that all positions are closed before the market closes for the trading day to avoid unmanageable risks and negative price gaps between one day’s close and the next day’s price at the open. Traders who trade in this capacity are generally classified as speculators. Day trading contrasts with the long-term trades underlying buy and hold and value investing strategies. Day trading can be considered a form of gambling.

Day traders are attuned to events that cause short-term market moves. Trading based on the news is a popular technique. Scheduled announcements such as economic statistics, corporate earnings, or interest rates are subject to market expectations and market psychology. Markets react when those expectations are not met or are exceeded–usually with sudden, significant moves–which can greatly benefit day traders.

Day traders use numerous intraday strategies. These strategies include:

• Scalping: this strategy attempts to make numerous small profits on small prices changes throughout the day
• Range trading: this strategy primarily uses support and resistance levels to determine buy and sell decisions.
• News-based trading: this strategy typically seizes trading opportunities from the heightened volatility around news events
• High-frequency trading (HFT): these strategies use sophisticated algorithms to exploit small or short-term market inefficiencies

What you need to be a successful day trader

• Discipline
• Sufficient knowledge and experience in the market
• Enough capital
• A good strategy

For more information on what you need to be a successful day trader, read this article below before proceeding