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BASICS OF TRADING

Author: EllaTaylor   |   Latest post: Wed, 29 Jun 2022, 1:58 AM

 

BASICS OF DAY TRADING

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Basic's of Day Trading 

 
 
 
 
 
Day trading usually refers to the practice of buying and selling a security during one trading day. This can happen in any market, but mostly in the foreign exchange (forex) and stock markets. Day traders are usually trained and well funded. They use high-volume leverage and short-term trading strategies to take advantage of the small price movements that occur with more liquid stocks than currencies.
 
Day traders agree to events that cause short market movements. News-based trading is a popular technique. Planned announcements, such as economic statistics, business profits and interest rates, are subject to market expectations and market psychology. Markets react when expectations are not met or exceeded - often by sudden, significant movements - which can benefit daily traders a lot.Day traders use many intraday strategies. These strategies include:-


 

Scalping: This strategy seeks to make many small profits with small price changes during the day.
Range trading: This strategy primarily uses levels of support and resistance to make decisions and sell.
News-Based Trading: This strategy often takes advantage of trading opportunities with increasing volatility around news events.
High-Frequency Trading (HFT): These strategies use sophisticated algorithms to take advantage of small or short-term market inefficiencies

Sufficient Capital:-

Day traders only use venture capital that they can lose. This will not only protect them from financial damage, but will also help dispel the emotions of their business. A large amount of capital is always needed to make effective use of intraday price movements. Access to sufficient capital is very important, as most day traders use a high level of leverage on margin accounts and rapid market changes can cause major margin challenges.

 

Short Strategy:-

The trader needs to look into the rest of the market. Day traders use many different strategies, including swing trading, arbitrage and news trading. They refine these strategies until they can achieve consistent profits and effectively reduce losses.
 
Disintegration strategy
Type Reward for risk
Swing trading at high altitude
Arbitrage Low Medium
Business News Medium Medium
Mergers / Acquisitions of Medium High notice

Risks of Daily Trading:-

For the average investor, daily trading can be a daunting task due to the number of risks involved. The US Securities and Exchange Commission (SEC) highlights some of the risks of day-to-day trading, which are summarized below:
 
Be prepared to suffer a great financial loss: Because day traders often suffer severe financial losses in the first months of trading and many of them never make a profit, they only need to risk the money they can lose.
Day trading is extremely stressful and expensive full-time work: Day trading is very tricky when you look at a few quotes and price fluctuations to see the desired market trends and high concentration. Day traders also have high costs, often paying large amounts of commissions, training and computers to their companies.
Day traders rely heavily on borrowing money: Day trading strategies leverage borrowed money to make a profit, so many aders not only lose all their money but also get into debt. Don't believe the quick profit claims: Look for "hot tips" and "expert advice" from newsletters and websites that care for day traders, and keep in mind that training seminars and lessons on day trading can be unintentional.
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