| What is day trading? | | | | more of the total value of all shares held. Brokerage |
| Day trading is an extremely risky way of investing in | | | | fees for day traders can be substantially lower than |
| the stock market. Day trading is carried out by day | | | | fees for other types of traders. While margins for |
| traders who rapidly purchase and sell stocks over a | | | | most traders are usually around 50% of the value in |
| single day period in the hope that for the very short | | | | traders account, day traders can face levels as low |
| period over which they hold the stocks (ranging from | | | | as 25%. This means that a trader can by lets say, |
| just a few seconds to a couple of hours) the value | | | | $1000 worth of stock from an account of only $250. |
| will continue to climb or fall thus allowing day traders | | | | Tips for surviving and thriving as a day trader |
| to secure quick profits. | | | | The five most common strategies adopted by |
| How do you make profits? | | | | daytraders who seek to make are profit are * Trend |
| The method of buying and selling stocks over a very | | | | following - used by all trading firms this strategy |
| short time period can create huge profits or losses | | | | assumes that stocks that having been rising steadily |
| for the day trader in just a couple of minutes or | | | | will continue to rise. |
| hours. Statistics show that 80-90% of all day traders | | | | * Playing news - this strategy is to buy stock in a |
| make a loss at the end of each trading day. | | | | company which has just announced good news |
| However day trading has become an increasing | | | | * Range Trading - this is where stock that has been |
| popular form of trading in recent years as a result of | | | | rising and falling is bought near the low price and sold |
| the internet and increased access to information. So | | | | as it hits the high price range. |
| while day trading used to be a marginal form of | | | | * Scalping - it is commonly defined as a very quick |
| stock trading reserved for the most part to financial | | | | trade. |
| firms professional traders and an elite group of | | | | * Covering spreads - To play the spread or the |
| private investors it is now also very common method | | | | make the spread simply means to buy stock at the |
| of trading among casual traders. | | | | Bid price and sell the stock at the Ask price. The |
| What do day traders look like? | | | | difference between the bid price and the ask price is |
| Day traders are defined as traders who place four or | | | | known as the spread. Because there is an historical |
| more round-trip orders over a five day time period | | | | tendency for the stock market to rise profit can be |
| and the total trading activity over a day is 6% or | | | | expected for this form of trading. |