Definition of day trading
Day trading is the term used to describe daily trading during the opening hours of the stock exchange. All positions must be closed by the end of the day, in the end, the day. Unlike long-term investors, small price fluctuations are usually used to generate profits. Day trading can be carried out on any asset and market.
Day trader characteristics:
- Daily exchange trading with a fixed working schedule
- Trade and profit from small market movements
- Fast reaction to the news and political decisions
- Opens positions with higher capital and leverage
DAY TRADING BASIS – HOW DOES IT WORK?
Many people want to get rich like day traders, but how does it work, and what is a “day of trading”? – As traders with over 7 years of experience, we explain how day trading works and what basics beginners or advanced traders should consider. You will receive an overview of this special stock trading method and sustainable tips and tricks.
Day traders trade the markets 5 days a week (Exception: Cryptocurrencies are traded 24/7). Special attention is paid to the opening hours of the exchange, as most traders are active there and the trading volume is very high. Day trading can be viewed as a normal job, but without a fixed income if you do it as an individual. One has fixed business hours and trades consistently on a daily basis. Professional day traders in banks or institutions received a fixed income and receive a bonus for making a profit with trading.
Day trading software
Some traders prefer to trade for just a few seconds, while others prefer to trade for several hours. Day trading adapts to the wishes of the trader. The trader always depends on the market situation. If there is no movement you cannot make a successful trade. High volatility (movement) of the market is a friend of the day trader.
Day trading can be compared to normal work, but here you are paid at the market according to your own performance. The profit is realized through the price formation of the markets.
Popular markets for day traders:
- Forex (currencies)
- Commodities (oil, wheat, and more)
- Metals (gold, silver, and more)
- ETFs (Exchange Traded Funds)
- Government bonds
Assets with high trading volume and volatility are popular. Especially economic news is interesting for day traders to make quick profits. Day traders exclusively trade derivatives or large stock positions. Derivatives are leveraged trading positions with the underlying asset (market). For this, various financial products can be used. In most cases, we are talking about either CFDs (Contracts for Difference) or futures contracts (futures contracts). CFDs are the most popular because CFDs can be traded with very little initial capital and provide quick access to all markets.
Popular financial products for day traders:
- Different types of works
- CFD (Contracts for Difference)
- Credit Trading Products
How much money do you need to trade a day?
How much money do you need for day trading? This is a very popular question and most beginners ask it. From our experience, day trading can be started with a very small amount of money. It depends on the financial product you are trading. For example, CFDs or some digital options are offered for trading with less than $ 1 of investment. For other products such as Futures, you will need a minimum margin of $ 500 per contract (we recommend using over $ 20,000 to trade futures because these are highly leveraged products). In addition, some stocks can be traded for prices as low as $ 5 or less.
In general, it is depending on the financial product you want to trade and invest in. The most important thing is to try out day trading, financial product, and markets. This can be done with a free demo trading account that is offered by most online brokers.
Advantages and Disadvantages of Day Trading
Why should you start with day trading? – Like any other trading style, there are advantages and disadvantages. In general, many traders are fascinated by the exchange of their own work for stock trading. It is tempting to just spend working time in front of the computer and make money.
Benefits also to make a profit quickly. While the longer investments pay off a few percent a month, the daytrader does his daily interest. In addition, it saves swap costs (funding costs, interest) for leveraged derivatives that are charged overnight. In general, however, there are higher trading fees because the frequency of day trading can be very high.