Day Trading Definition for beginners
Hello Friends, Most of the newbies in Stock market start their Stock Market trading career by Day Trading. Everyone starts by Day Trading and after they convert themselves into positional traders, seasonal traders, Value investor etc. Today, We are going to give you exact Day Trading Definition for beginners and how they handle their initial days of Trading career.
Day Trading term is used for those Stock Traders who take entry and exit from any trade on same day. No matter, they are in profit or loss they start their stock trading with a philosophy that they will get out by end of the day. Most of the Day traders work from their homes with a reliable internet connection. Most of the Day traders Don’t take more than 4-5 trades in a day and they just get out of the trade once It hit stop loss or It hit their Target Price.
Day Traders Value for the Stock Market
Day Traders help stock market to maintain enough volatility and they make sure any Stock is fairly valued according to their past performance and future prospectus. Before Electronic Trading, Day Trading was not so popular because of less commission, long settlement period, less volatility and high trading fees.
Strategies used by Day Trading beginners
Every Day Trader has different strategies to make profit from stock market. All they wanted fix profit/decided their fix loss; after that they get out of Stock Market and enjoy the day. Types of Strategies used by day trading in beginning;
- Any positive/negative news is leaked in stock market and stock is getting momentum, They will make entry on the basis of news and exit once it get stabilized at any price.
- Some of day traders had highly setup system which shows momentum of the stock on the spot and its entry get done automatically and exit is also done automatically by the same setup.
- Some of day trader use technical chart ( momentum indicator or MACD) to follow the trend of stock and set up their trade.
- Many of the day trader find support and resistance point for the stock for a day and execute their trades accordingly.
In Short, Electronic trading changed the structure of Stock Trading. Now, You can set up your trading account online in a week and start trading by adding funds. You don’t need to go somewhere else to start your trading.
Day Traders focus on Blue Chip Stocks as their momentum is enough to trade and Blue chip stocks can’t fake momentum as they can’t be managed by any single group or trader.
Risk & Reward of Day Trading
We know, everything has its pros and cons. Day Trading is not as easy as It seems. You have to set up a discipline before starting stock trading and there is very less ratio of successful people in Day trading as compared to investor or positional trader.
Risks of Day Trading
- It is hard to decide the trend for a single day as it could be momentarily also. According to market studies, only 20% of total day traders are successful at a single time.
- If you are in profit, your greed will not allow you to book profit and once greed comes over discipline, No one can’t make profit from trading.
- Day trading is highly competitive now a days. Everyone wants to day Trading but no one wants to learn strategies and Technical charts which is a completely indication of the failure.
Benefits of Day Trading.
- You are working as a freelancer and there’s no fixed hours for you. Best thing is that you can work from home also.
- It is rewarding if you are improving your skills and handling your emotions at same time.
- Once you are familiar with trends of some blue chip stocks, It will be easy for you to get fixed returns on basis of your past performance.
All I want you to give you a warning before starting Day Trading as career; Start with paper trading and backtest your strategies before executing and trade with real money.
Learn technical analysis as much as you possible because Technical Analysis is most rewarding for the day traders.