Published on: September 09, 2022
Author: Laura Brocca
|Table of Content
|So, what is day trading?
|Where to start?
|What you need to know
|Which financial product to choose?
|Buy and Sell
Defined as the practice of buying and selling stocks, day-to-day trading differs from long-term trades in terms of both timeframe and strategy.
Typically, long-term traders will buy and hold and invest, whereas day traders can rely on a day’s risk and avoid negative price gaps to buy and sell within a single day.
For you to day trade successfully, you will need a good knowledge of the markets and a bold risk analysis and strategy to best evaluate when to buy and sell your financial product of choice.
you'll also need a great app like amana, so download the app and let's begin.
Day trading has seen a dramatic increase in popularity ever since the outbreak of the COVID-19 pandemic, and quite rightly so.
Attracted by dynamic volatility and high growth in retail stocks, people saw an opportunity to trade online and become familiar with trading strategies.
Do not forget that day-to-day trading is a high-risk investment strategy, especially when not backed by highly sophisticated trading algorithms. You will be competing with very skilled people whether you like it or not. And it’s not just about the amount you’re ready to take out of your savings; there are still many penniless stocks with no value. So beware and inform yourself so you can increase your odds and increase your chance of success.
Remember all those movies where many people stand in a big room facing a large black screen with a threatening graph?
That’s the stock market. It’s filled with opportunities and sometimes may change from one moment to the next.
It’s all about knowing when and what to read before you pick up your phone and start trading. So, what’s out there to read?
First, as a day trader, you need to be on the lookout for what can affect stocks.
These factors can include companies’ news and earnings results, key economic indicator releases, central bank meetings, and speeches, as well as geopolitical risks that may affect specific markets, or sometimes all markets.
You can also keep yourself informed on other companies and their stocks and scan reliable business news daily.
Don’t be impatient; it may take a few tries before finding your method to keep up to date quickly and effectively.
Just remember it’s important to diversify; going global will give you a chance to pick up foreign and sometimes even cheaper alternative financial products.
if you are a visual learner watch a video about the financial market
With all of that said and done, why don’t long traders just shift to day trading?
Well, day trading requires a lot of rigor; most day traders can gain profits by looking at the minute and sometimes millisecond price movements in their assets.
While some rely on software, they also usually leverage large amounts of capital once they get their eye on the winning financial product.
In deciding what to buy, you should look at three things:
The goal of intraday trading is to profit from intraday fluctuations. Day traders implement a variety of strategies to accomplish this.
The most popular of these strategies is trend following, which works by identifying the market’s current direction and trading in that direction.
In contrast, mean reversion trading works by trading against intraday trends to position against extremes (tops and bottoms).
Additionally, there are non-directional trading strategies like scalping, which aims to make money from quick fluctuations in market prices.
Additionally, we have volatility strategies known as news traders that seek to capitalize on short-term volatility spikes brought on by macroeconomic releases or any other flash news.
On the other hand, high-frequency trading (HTF) is considered a day trading strategy, but that’s an institutional-grade strategy because the advantage of this strategy is the speed and technology to make thousands of trades for tiny profits, which is rarely available to retail traders.
· List of the most Popular Intraday strategies:
o Trend following
o Mean reversion
o Volatility High-frequency trading (HTF):
Intraday traders primarily look for three factors when selecting financial instruments (volatility, liquidity, and cost).
In simplified terms, they’re looking for moving assets with high trading activity and low trading costs. It’s a good thing you didn’t have to do your excise and look for the best instruments for intraday trading.
In day trading, there is a well-known popular instrument. In the world of FX, the EUR/USD is the most traded instrument, with more than a trillion dollars in average daily volume, according to the BIS. And when it comes to commodities, we have Gold and Crude oil (Brent and – WTI).
Among indices, S&P500 is very popular, and so is DAX40. There are numerous instruments to trade intraday, but if you want to try out new products for intraday trading, don’t forget to check out the three factors!
if you are interested in crypto read about day trading cryptocurrency
Intraday trading is not the same as buying only a trading system, as most investors do. It’s considered to profit from intraday fluctuations by buying or selling any financial instrument.
That’s why intraday traders typically use CFDs (contracts for difference) to buy or sell with a margin!
read about something fun and educational like options, ETFs, stocks software.
· Learn to mitigate risks long-term. Rome was not built on a (trading) day.
· Know when to exit your trade. Set a maximum loss per day that you can afford.
· Familiarize yourself with trends to unleash opportunities.
Move forward with steady steps towards increasing your knowledge, and when you feel that you have gained enough experience download the amana app. And start your investment journey with us.