Month: February 2018

Day trading is all about speculations in buying and selling of financial instruments like bonds, stocks, securities, deposits, foreign exchange derivatives, assets, currencies, etc., which is done within the beginning and end of the same day, usually before the market closes for the trading day. Traders who are participating in it are called day or active traders and they take the role of speculators if they trade with a motive of making profit.

Before the advent of electronic and margin trading, it was an activity which was done by financial firms like banks or investment firms, who were specialists in equity and fund management, but now at-home traders have also become more popular. The trade may either last for a few minutes or may take many days to complete. Some traders, who do a trading business, buy and sell many times in a day and charge a trading fee from their clients. Though this is called day-trading, it involves many styles, traits, and risks. Many traders stop doing transactions before the market closes for the day, to avoid unwanted risks like the differences between the previous day’s close and the next day’s open bull price, while some traders have a belief that they should let the profits run even after the market closes.

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Presently, a lot of people have started becoming interested in the day trading market. Although a lot of cash can be earned through trading, a trader should focus on the market all through the day, employ a strategy and stick to it.

The following are a few simple strategies that can be followed by a day-trader.

Scalping. This one of the most important and basic day trading strategy. This is a process where any of the financial instruments is sold immediately after the profit is made. This is a strategy where a trader gains small amount of profit from each trade and eventually makes a huge amount of profit through a lot of selling. Many such traders do a selling of more than hundred trades in a day.

Trend Following. This is an investment or trading strategy which is used in all times, where traders believe that the price of the financial investments which are rising will continue to rise and vice versa. The trader buys such an investment or short sells the ones which are lowering in price, expecting the trend to follow.

Daily Pivots. This strategy is used by traders who concentrate on high volatile investments. These strategists keep track of the movement of the investments and take advantage when the price is really high and when the price is at a reversal. These day traders buy when the price is low during the day and sell when the price is really high, thus making profit.

Fading. This is a contrarian investment strategy, where the trade is made against the trend. This is a very high risk strategy, but brings maximum profit. A trader who is using this strategy will sell an investment when the price is rising and would buy when the price is falling.

News Playing or Momentum. This is a strategy based on the new releases or finding the investments which are moving with a high volume. This type of trader usually invests in a financial instrument based on a news release and follows a trend until there are signs of reversal. This is mainly based on the volume and when the volume cease to decrease the instrument is sold.

Candlesticks Chart. This is used by investors who follow a candlestick charting where a technical analysis is determined by a bar chart pattern. Once a pattern is recognized a trader starts to take position and does a trading.

These are the general strategies that should help any day trader to do trading that fits during the time frame of day trading.

Alpha7Trading provides extensive trading courses and also helps out students and traders learn the best day trading strategies. To know more about day trading, you may visit Wikipedia.org.