Day Trading

What is Day Trading ?
It is perfect for the short term intra-day trader , who would like to hold on to the position for a few minutes to a few hour with a view of square their position before the end of the day .
 Day trading involves taking a position in the markets with a view of squaring that position before the end of that day .
 A day trader typically trades several times a day looking for fractions of a point to a few points per trade , but who close out all their positions by day’s end .
 The goal of a day trader is to capitalize on the price movement within one trading day .
 Unlike investors , a day trader may hold positions for only a few seconds or minutes , and never overnight .

What Day Trading really means ?
The term “ day trading “ is a widely misused and misunderstood term . Real day trading means not holding on to your stock positions beyond the current trading day ; in other words , not holding any position overnight .. this is really the safest way to day trade , because you are not exposed to the potential losses that could occur , when the stock market is closed due to news that could affect the prices of your stocks . Unfortunately , many people who claim to be “ day trading “ hold stocks overnight because of fear or greed , thus setting themselves up for the catastrophic of their capital . With the fluctuation of trading currencies , the term “ day trading “ changes slightly . Since currencies could be traded 24-hours-a-day , there is no such thing as “ overnight “ trading . Thus you could have open positions for longer than a day with active stop losses that could be activated at any time .
Day trading could be subdivided into a number of styles , including :
Scalpers : This style of day trading involves the rapid and repeated buying and selling of a large volume of stocks within seconds or minutes . The objectives is to earn a small profit share o0n each transaction while minimizing the risk .
Momentum Traders : This style of day trading involves identifying and trading stocks that are in a moving pattern during the day , in an attempt to buy such stocks at bottoms and sell at the tops .

Advantages of Day Trading
Zero Overnight Risk : Since positions are closed prior to the end of the trading day , new and events that effect next trading day’s opening prices do not effect your portfolio .

Increased Leverage : Day traders have a greater leverage on their trading capital because of the low margin requirements as their traders that are closed in the same market day . This increased leverage could increase your profits if used wisely .

Profit in any Market Direction : Day trading often will utilize short – selling trading to take advantage of declining stock prices . The ability to lock in profits even as market falls throughout the trading day is extremely useful during bear market conditions .

Day Trading Tips
Buy near Open Price : If possible try to buy shares below open price , or at the open price . Do not buy them if the price surges than open market price , wait for the price to come down near open price and then buy that stock .

Check Buying volumes : Before buying check out the buying and the selling quantity . The stock may go up if buying volume increases .

Check Derivative status : Check out the derivative of the stock that you wish to buy , if possible . If it if up with increasing buying volumes , you could immediately grab that share .Most of the time , it has been found that stock or share surges proportional to the derivative surge .

Wait for the target price to buy : For example , if buy is given at 150.5 , do not buy below this price , but at 150.5 price or slightly higher price . Share price may or may not go up above 150.5 for the given price , but not below the target price

Strictly maintain Stop loss : Maintain the given stop losses . This will help you to prevent from the huge loss . Suppose , for the moment , the stock what you bought falls drastically down , you may end up with the huge loss . So always maintain given stop loss .

Down wait for huge profit in single Stock : If you get some profit and notice its buoyancy then you have to sell your stock and come out of that trade . In this manner , you could earn small profit instead of loss then you could switch over to another trade and earn small profit . Likewise , if you keep earning couple of small profits in a single day , then your small profits will add up to huge profit amount in a single day . In day trading , you could forecast the move of the market using statistical tools . If you take a proper training on stock day trading , you could minimize the risk based on he mathematical analysis unlike the instincts working in any of the gambling games . Do not consider day trading as a tool to ‘get rich quick ‘ or ‘earn million overnight ‘ .

How to beat the Market Consistently ?
1. If you are new , always buy when market is up and sell when the market is down . You could do opposite but that is complicated . This had been the trading in the right decision .
2. You should consider it as business and ready to accept the loss . this means you should decide your selling price beforehand . If you achieve your desired profit , get out of the deal or if you make loss book the loss and prepare for the next step . Put control on your fear and greed .
3. Follow the age-old practice not to pull all the eggs in the same basket . Invest money in blue chip as well as mid cap with high momentum , this will reduce the heavy losses against high return .
4. Make an initial investment and always save some part of your profit as investment .
5. Loss is the part of any investment . Have a modest initial target to beat the market by 10 percent per annum . Try to be an average investor first .