Day trading is the practice of active buying and selling of the stocks, options, futures and currencies within a trading day. All trades are completed within a day so that after the closing of market the day trader do no hold any open positions and therefore are not subjected to any overnight risks. The traders trade against very small changes in price of the financial instruments. Day trading is usually a vigorous trading activity requiring high concentration and time during trading hours.
Day traders can be grouped into two broad categories as scalpers and momentum traders. Scalpers trade in large quantities completing each trade within seconds or minutes. Most scalpers are usually large financial firms or investors like institutional traders. Momentum traders are usually individual traders who trade according to the stock market trends. The trading volume of momentum traders usually depends on the market condition. Some other popular trading strategies include range trading, news playing and rebate trading.
Day trading psychology involves building confidence, and consistent, profitable results will lead to confidence. Being a 27+ year veteran trader, my day trading advice for you would be to trade your strategy in simulation mode so that you can judge it rationally. The inexperienced trader (and even some traders with years of experience) has a difficult time thinking rationally when they are afraid of losing money, so take that fear out of the equation by utilizing simulation trading as a tool.
Some "professional" traders will tell you that simulation trading is useless or even, "the worst thing you can do." But it depends on why and how you utilize simulated trading. If you choose a simulation strategy that has a defined number of setups, a fairly specific strategy for limiting losses, and you stick to that strategy like glue, never deviating from it - then simulated trading is a logical way of testing your method in real time and it will help you greatly. Day trading psychology also involves self control. Cultivating good habits such as self control, and developing confidence while using a simulation method will help you when you're ready to trade for profit.
As told earlier, there are a variety of products available for day trading. The most popular ones are the stock and the forex currencies. Others include options like stock options and futures options, and futures like currency futures, stock futures, stock index futures and commodity futures.
Day traders work in short time frames, so trade profits are smaller. Where it might be reasonable for a position trader to target 100 points of profit over a period of several weeks, the day trader may realistically be limited to targets of 5 - 10 points. If trading costs for each trade are fixed at, say, 2 points, you can see that they constitute just 2% of the long term target profit, but may be 20% - 40% of the short term target profit. Unless a market has sufficient volatility for a trader to target profits significantly larger than trading costs, it is not suitable for day trading. Fortunately many such markets exist. Soybean and wheat futures are good examples. Suitable markets often have another advantage. Their periods of volatility frequently occur at specific times, typically short periods near the open and close of trading sessions. For example, I can usually enter my daily trade during the first thirty minutes of the trading session.
Day traders can be grouped into two broad categories as scalpers and momentum traders. Scalpers trade in large quantities completing each trade within seconds or minutes. Most scalpers are usually large financial firms or investors like institutional traders. Momentum traders are usually individual traders who trade according to the stock market trends. The trading volume of momentum traders usually depends on the market condition. Some other popular trading strategies include range trading, news playing and rebate trading.
Day trading psychology involves building confidence, and consistent, profitable results will lead to confidence. Being a 27+ year veteran trader, my day trading advice for you would be to trade your strategy in simulation mode so that you can judge it rationally. The inexperienced trader (and even some traders with years of experience) has a difficult time thinking rationally when they are afraid of losing money, so take that fear out of the equation by utilizing simulation trading as a tool.
Some "professional" traders will tell you that simulation trading is useless or even, "the worst thing you can do." But it depends on why and how you utilize simulated trading. If you choose a simulation strategy that has a defined number of setups, a fairly specific strategy for limiting losses, and you stick to that strategy like glue, never deviating from it - then simulated trading is a logical way of testing your method in real time and it will help you greatly. Day trading psychology also involves self control. Cultivating good habits such as self control, and developing confidence while using a simulation method will help you when you're ready to trade for profit.
As told earlier, there are a variety of products available for day trading. The most popular ones are the stock and the forex currencies. Others include options like stock options and futures options, and futures like currency futures, stock futures, stock index futures and commodity futures.
Day traders work in short time frames, so trade profits are smaller. Where it might be reasonable for a position trader to target 100 points of profit over a period of several weeks, the day trader may realistically be limited to targets of 5 - 10 points. If trading costs for each trade are fixed at, say, 2 points, you can see that they constitute just 2% of the long term target profit, but may be 20% - 40% of the short term target profit. Unless a market has sufficient volatility for a trader to target profits significantly larger than trading costs, it is not suitable for day trading. Fortunately many such markets exist. Soybean and wheat futures are good examples. Suitable markets often have another advantage. Their periods of volatility frequently occur at specific times, typically short periods near the open and close of trading sessions. For example, I can usually enter my daily trade during the first thirty minutes of the trading session.
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