Day Trading for Beginners – Strategies for Day Trading

What is day trading?

Day trading for beginners means trading in which the stocks are bought and sold within the same day. Most of the time, the day traders try to use the large amount of capital which they have to make profits out of the small variations in prices of the stocks. There are various day trading strategies which are used by day traders.

Day trading Strategies used by traders

When it comes to day trading, the traders look for 2 most important factors. These factors are volatility and liquidity. Volatility is required for this type of trading since this is what helps the trader to make profits. He tries to buy stocks on small dips and then sell them even when there is small increase in the share price. The other important factor is the liquidity. This is required since the trader should have a good amount of cash to invest while doing day trading. Smaller capital means smaller profits. Liquidity means more stocks are being traded on a daily basis.

One of the favorite stocks for day traders is Sun Microsystems (NASDAQ: SUNW). The stock price is cheap and millions of stocks of this company are being traded every day. Some other example are Citigroup (NYSE: C), Bank of America (NYSE: BAC), Microsoft (NASDAQ: MSFT) and Intel (NASDAQ: INTC).

There are several different strategies that day traders utilize, including: swing trading, arbitrage as well as trading news, among others. Once the day traders finalize the stocks on which they want to do the trading, they use multiple tools to find the entry point. The different tools being used commonly are: Intraday Candlestick Charts, real-time news service and Level II quotes/ECN.

After making an entry, the next step is to finds a suitable target price. As mentioned earlier, the price movement may not be huge. There are different strategies which day traders use to get to a target price which include scalping, fading, day pivots and stock momentum.

Day trading is a very risky business. The day trader has to master the skill over the years. He should have proper channels to remain updated every minute. Most of the day traders fail when they start doing this type of trading. Hopefully, this day trading for beginners guide would be useful for some. After some research and practice, they should be able to master this type of trading.

Disclaimer: The methods described in this article (Day trading for Beginners) are for educational purposes only. The author and the publisher assume no responsibility for your trading results. Day trading involves a high degree of risk. No recommendation is being made to buy any stock, commodity, option or other financial instrument.

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