Day Trading can be best described as the buying and selling of a security within a single trading day. As a trader making a day trade, you will have to close out your position before the trading day closes to secure your gains. If you want to capitalise on small price movements made by high liquidity currencies or stocks, then day trading is for you.
On occasion, brokers have applied radically different definitions to what they consider as day traders and active traders. It is primarily based on how many trades a client opens and closes within a timeframe.
What trading markets can day traders access?
As a day trader, you can access several lucrative and popular trading markets. Some of the most popular ones are explained in brief below.
- Stocks: You can trade in the stock market in various ways. You can invest in physical stocks of companies directly. Alternatively, you can access regular and leveraged Exchange Traded Funds which consist of multiple commodities and stocks, but which are traded like a single stock. If you trade stocks intraday, you will get more benefits than using a simple “buy and hold” strategy. You can also speculate on stock prices through CFDs or spread betting as well.
- Forex trading: Forex or foreign exchange is still one of the world’s most popular and liquid market. Day traders will find it attractive because of the sheer volume it possesses. Many trending currency pairs in the market presents multiple short-term opportunities because of the presence of liquidity. The forex market operates on a six-day week, 24-hour basis and thus provide a great entry point for novice traders into the market.
- Binary options: When trading binary options, you will find that the timing and returns of successful trading is known in advance. This is due to the nature of the instruments in question. Some regulatory changes such imposed by ESMA have outlawed binary option trading to U.K citizens. However, there are a number of online brokers such as IQ Option that have introduced new products such as digital options and fx options for day traders to access.
- Cryptocurrency trading: The cryptocurrency landscape has grown especially in the last few years, with Bitcoin and Ethereum still leading the way. Many new investors have experienced unimaginable success stories in this market. Due to the efforts of many online broker, the barrier to entry for this market is almost nil.
How to get started as a day trader?
- Gather knowledge about the market: One of the first things you can do if you are just starting off as a day trader is to get educated about the market. There are several educational resources available on the net from authoritative sources that can provide you an insight into the nuances of the market. Additionally, many online brokers have also started providing educational information in the form of FAQs, webinars and instructional videos for their newer clients.
- Learning about patterns and technical analysis: As day trader, you will have to decipher individual motivations. By using chart patterns, you can get a clear picture of the trading activity in the market. For instance, charts can highlight certain USD day trading signals such as volatility which can help in the prediction of future price movements.
- Select your trading strategy: There are several simple strategies that you can use while day trading. However, you have to make sure that the data extracted is accurate, carefully laid out in spreadsheets and in charts. Some of these trading strategies include utilising news, simple day trading exit strategy, arbitrage trading, trading on volume, scalping, trading zones, swing trading and scalping. Make sure to stick to your own preferred short-term trading strategies, parameters and rules that you are comfortable with.
- Select the right broker or platform: With the growth of high speed internet connectivity, the emergence of online brokerage platforms has made it easy and inexpensive for anyone to access trading markets. As a day trader, your choice of brokerage and trading platforms will affect your tradability and how much profitable opportunities you will get. Thus, the broker you choose should always have a good reputation, favourable fees, lots of instruments on offer, as well as be regulated by an international financial regulatory body.
An interesting choice for day traders is IQ Option. Apart from providing a myriad of instruments such as forex, stocks, cryptocurrencies, options, and ETFs, just to name a few, it also provides a demo account for newcomers to practice. They have one of the most favourable trading conditions in the industry with a $10 minimum deposit requirement as well as a minimum trade amount of $1. You can find more information about in https://www.iqoptionmag.com/
You must possess a lot of patience, self-discipline, and knowledge about the market, as well as consider the risks associated with it. Numerous online brokers are operating in the market, offering their services securely and with regulatory.
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The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.