How to do Day Trading

Day trading the market

Day trading is a subject which is liked and disliked by many people in market. Since the online trading came into being. day trading has become very popular. The trader can sit at home and through the broker installed software trades can be executed. There are some broker office branches and franchise offices that offer online trading. There too the trader can execute trades. Even though day trading has become very popular it is one of the most risky business. The day traders too well aware of these risks. In a day trade, the trader buys and sells the stocks or options on the same day of trade. He never takes overnight position and exposes himself to market risks. 

It takes some specials skills and a different approach to do day trading. A day trader takes into consideration the general trend of the market, the day’s trend, the stocks he picks for trading and the news associated with the stock. Some times news affecting the entire market will also come to play. The day trader can take a position either short or long, depending on the market condition. He makes quick decisions to book profit or losses. 

For new comers who have interest in day trading should make a careful approach. The most important thing about the day trading is fast decision making. It is this quality that decides the success of day trading. First and foremost he should pick the right stock to trade. It should have sufficient liquidity. He should be well aware of the price movement of the stock. He can consult a pivot point chart and try to understand the price variation. He can do some paper trading until he feels comfortable and ready for real market.

The trader can go long or short depending upon the market condition and the stock he picks for trading. There are certain factors that should be considered here. The trader should have a realistic target for profit booking. Greed is a dangerous factor that kills a trader’s investment. If a modest target is set the trader can successfully close the trade and walk away.

If the trade goes against his calculation, the trader should not hesitate to book loss. Some analyst advice the traders to take delivery and wait for the stock to move up. But from a day trading point of view it is much better to book loss and close the trade. Because the price of a stock will not come down without a valid reason. In many cases the following day’s price will be a continuation of the previous day. 

I have noticed traders concentrating on a single stock are successful at day trading. This is also a point to consider. Concentrating on a single stock and watch its movement follow the news related to it gives the trader some experience, and he places himself  in a better position as a day trader. 

I hope the above write-up will be useful for new comers to day trading. 

Happy trading!