While day trading is neither illegal nor is it unethical, it can be highly risky. As a trader you will probably fall into two main categories—traders who like to trade the breakout and traders who like to join the trend once established. Most day traders have their favourite markets.
You don’t need to know everything about day trading to succeed as a day trader. More important for the day-trader than others is to have the proper ‘team’ in place. Keep in mind a day-trader with a computer and access to the Internet already has access to a world of information.
Some day traders might buy and sell stocks in minutes, but might also hold some overnight or longer. During the day trading, a day trader will quickly buy a large number of stocks at a time and sell it once they see the stock gain within the day. Some of the more commonly day-traded financial instruments are stocks, stock options, currencies, and a host of futures contracts such as equity index futures, interest-rate futures, and commodity futures.
With the unlimited potential to earn of day trading, comes the possibility of great financial loss. The Forex market is the largest financial market in the world with average daily trading of the currencies going over US $1.6 trillion. Day trading doesn’t mean trading every day. Day trading simply means not holding any position beyond the current trading day.
Many day traders make dozens of trades every market day hoping to capture profits that arise from small intraday price fluctuations. Before starting out in the Forex day trading market we need to make sure we understand the basics of day trading. Even if you are starting out with a small day trading float, you should practice good money management.
By simply changing the amount of capital you risk in your day trading, you can turn a system from returning 10% to returning a 100% per annum. As the prices go up and down, the day trader must be alert as to when to sell his stock or wait for the moment to hold on it. Your best chance to make money trading is by following the path of the best traders.
In day trading either you earn or lose quickly
Access to timely information and fast execution of trades is essential to day trade successfully. You must know how to do day trade if you want to be a successful day trader. Some websites have sought to profit from day traders by offering them hot tips and stock picks for a fee.
Many day traders go bankrupt because they lose money, not because they don’t make enough money. You’ll need to ascertain for yourself whether you are comfortable with the levels of risk inherent in day trading.
Do you have the tolerance for the risk involved with day trading? Day traders typically hold stocks anywhere from only a few seconds to several hours but they never keep stocks overnight. Can day-trading be learned? Be aware that day trading does not offer the protection of an advisor who can tell you whether a particular investment is suitable to your financial goals.
