Day trading stocks strategies
Day trading is traditionally defined as buying and selling stock, options, or commodities during the same trading day trading be have your positions closed by the end of the trading session. In the past, day trading had been reserved for financial companies and professional investors. A large percentage of strategies traders work for investment firms or are specialists in fund management. With the advance of technology, day trading has continue to grow among the casual trader working from home. Before day trading, if someone wanted to trade a stock, they needed strategies call a stock broker to place their order, who would then route the order through a specialist on the floor of the exchange. The specialist would match the buyer with a seller and write up a physical ticket that would transfer the stock and send that confirmation back to both brokers. Inthe SEC Securities and Exchange Commission made fixed commission rates illegal opening up the markets to the first of the discount brokers competing for business by lowering their commissions and making short term trading much more profitable. The following are basic strategies used by day traders. Some of these strategies require short selling stocks instead of buying them long. There are a few challenges to short selling stock which include your broker not having shares which you trading short or the stock might be restricted from being shorted on that exchange. Trend Trading is a strategy where it is believed that a stock that stocks rising will continue to rise, or a stock that is falling will continue to fall. You enter the trade in the direction of the trend and exit once the price breaks this trend. Click here for more information on Trend Trading. This strategy assumes that prices that have been rising or day at a high rate of momentum will reverse and start going to opposite direction. The basic idea is that you are trading in the opposite direction as the masses. Click here to learn more about contrarian trading strategies. Traders using this strategy will buy long when the price is at the lower end of the channel and sell short when prices are at the upper end of the price range. Click here for more information on range trading. This trading strategy used to be defined as spread trading stocks you would take profits where small gaps expanded and contracted between the bid and the ask price for a stock. The basic idea of scalping is to take advantage of market inefficiencies using speed and high trading volume to create quick profits. Click here for more information on scalping. This strategy is mostly only done by day traders. It requires that you have access to one to several real-time news sources and can make split second decisions. News and rumors can provide large amounts of volatility and high emotion creating great opportunities if traded properly. Click here for more information on trading news and rumors. Due to the increased leverage and quick returns, day trading can be extremely profitable. The downside is that if done incorrectly, it can also be extremely unprofitable. Due to the high volatility of day trading, some people have labeled Day Traders as gamblers or adrenaline junkies. However, many people make a very consistent and comfortable living from day trading. Some even make millions of dollars each year. Buying on margin can greatly increase your gains or losses. Brokerages usually allow a bigger margin percentage for a day trading account but reduce the amount of margin available for positions held overnight. That number drops to 2 to 1 for positions held overnight, which can be called overnight margin buying power. If you have 4 round trip trades in a 5 day period, you will be restricted from day trading for 90 days. Your brokerage firm will probably allow you to buy a stock and hold it overnight before day the position. If you have a second day trade violation, your account will either be restricted from trading or you can request your account be a non day trader status account and buy and then sell after 3 business days. This depends upon the specific brokerage firms rules for some of these details but they are getting very strict with enforcing these rules. Announcements Today's Top10 Stocks Get FREE Weekly Stock Report! Terms of use apply. Read Disclaimer By using this site and our products you agree day our Terms and ConditionsPrivacy Policy and Return Policy. How to Be a Day Trader. What is Day Trading? The History of Day Trading Before day trading, if someone wanted to trade a stock, they needed to call a stock broker to place their order, who would then route the order through a specialist on the floor of the exchange. Day Trading Strategies The following are basic strategies used by day traders. Trend Trading Trend Trading is a strategy where it is believed that a stock trading is rising will continue to rise, or a stock that is falling will continue to fall. Contrarian Trading This strategy assumes that prices that have been rising or falling at a high rate of momentum will reverse and start going to opposite direction. Scalping Stocks trading strategy used to be defined as spread trading where you would take profits where small gaps expanded and contracted between the bid and the ask price for a stock. Trading Rumors and News Events This strategy is mostly only done by strategies traders. Risk versus Reward Due to the increased leverage and quick returns, day trading can be extremely profitable. Using Margin Buying on margin can greatly increase your gains or losses. Thursday, June 15th -
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