Candlestick Trading Blog
June 5, 2009
Trading Day
| Trading Day for a Day Trader Day trading stocks is the buying and selling of stock within the same trading day and trades are typically closed out by the end of each day. Other financial instruments such as stock options, currencies, commodities and futures contracts are day traded as well. Some day traders may place several hundred trades each day while some day traders may trade a significantly lower number. It really depends on the trading style. Some traders may focus on short term stock trading in which they trade within seconds and minutes ever day. They buy and sell stock several times throughout the day. These traders receive very deep discounts due to their high volume of stock trading. Some day traders focus their trading day on momentum or trend trading. This type of trading typically results in fewer trades per day as traders patiently wait for the right trade for that day. As mentioned previously, when day trading, traders will close out of their positions before the close of the stock market. They do this in order to avoid price gaps which are the difference in stock price between the previous close and the next day's open. Some stick to this rule very firmly while others follow it a little more loosely. Some day traders will stay in a position overnight as long as it is still in a winning position and the trend is showing this. They choose to stick with the rule of thumb "let your profits run" that is followed by stock traders. These traders believe that if they close out too early on a trading day then they are going against market wisdom. Some day traders will borrow money in order to day trade, called margin trading. When buying stocks on margin often times the trading account will be charged interest for holding positions overnight. This discourages day traders who buy stocks on margin, from holding positions overnight. In fact, the margin that is required to hold a position overnight is typically about 50% of the stock's value! Due to this, the day trader must follow their exit strategies and implement stop loss orders in order to ensure that they limit their losses. This is not the place to have false hopes as it can cost you big! Continue to read about day trading to see if this trading style is a good fit for you. You should also read about swing trading as well as the different stock trading strategies involved with both types of trading. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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