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A Basic Guide to Day Trading

In day trading you buy and sell stocks on the same trading day. Trading positions are usually closed before the market closes for the trading day.

Day trading can be differentiated from after-hours trading where there is a continuation of trading activity even after the regular marketing hours when the stock exchange closes.

Buyers and sellers during a single trading day are called day traders. You might be imagining day trading as something very hectic. In actual practice, this may not be so. You can make several trades a day or you may just make a single trade.

You may even just buy a stock on one day and sell it on the next day if you think that it is not profitable to sell it on the same day. You don’t need to finish off your trading activity on the same day since there are no legal restrictions on this. There is a small brokerage fee that you need to pay if you take your trade to the next day.

At the end of the trading day, traders usually close their trading positions. You may have a strategy on a particular day or you may have a general trading style and outlook, and both of these types of strategies determine the trading frequency for the say.

You will find traders who do very short or short-term trading. They finish off their trades in a matter of a few minutes or seconds. These are high volume traders who buy and sell several times a day. Brokers reward them with big discounts on commissions because of the huge volume of their trades.

Some people don’t actually want this reduced brokerages. These people are not short term traders since their focus is on momentum or trends of the stock movement. Sometimes there are really strong trades during the day and this is what these types of traders look for. During the trading day, they only make a few trades.

There are traders who make sure that their stock are sole at the close of the market day since they want to avoid the risk the comes from the price gap between the closing price on the day they bought the stock and its opening price the next day. These people consider this practice as a golden rule which they follow religiously.

There are those who stay with the position even after the market closes so that their profits will run.

Day traders may quick profit and quick losses in a matter of minutes or at the end of the trading day. Although you might think that day trading is like gambling, there is a marked difference between the two. IN day trading you need strategies and calculated moves which you don’t do when gambling.

If you want to learn more about day trading, click here for more info and tips.

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