Stock Market Day Trading:
Day trading is a method of investment in online daily stock trading with
reasonable money.Summary:
1. Day Trading.
2. Types of traders
3. Basic requirements of stock market
day trading
4. Working of stock market day trading
Stocks are traded in numerous ways
and this makes every one to choose their best form of trading in the market.
One of them is day trading and most of traders choose this type of trading.
From the general view of the market analyst and technical analyst, this
type of trading is the best one to do. It involves buying and selling of
securities done in the market of the same day itself. As a general procedure,
one should not hold stocks after the closure of market hours. Day trading
is known as intraday trading and most of them call by the later name in
the market. In this trading lot of transactions are allowed, that is, one
can buy and sell a same stock again and again to gain money from it. This
can be done with any number of securities in a day. Mostly, it is done when
the value of the share moves up and down. This movement is known as fluctuation,
and the market is said to be in volatile condition. Generally, there are
many terms involved in the day trading like long and short; however, long
is mostly used. Long indicates that one would buy the stocks first and then
sell it at a higher price. Short is opposite of long, and indicates that
one would first sell and then buy the stocks. Long is used when there is
a boom in the stock market, or in good stocks.
Short is normally used when there is a market correction happening or when
a security reaches a higher level, cannot go further high, and is expected
to fall. When the stock market reaches the saturation point, it tends to
fall, and this is known as market correction.Day trading requires keen knowledge
and basics of trading. Day trader is known as active trader because of his
numerous transactions he does per day compare to traders of other business.
They keep the stocks for a very short time and do several trading. They
are individuals who try to gain from the market. Day trading are very costly
because of the brokerage cost, service tax and income tax which are levied
automatically from the account of the traders. Brokerage firms are the medium
through which one can sell and buy the selected stock in the exchange. They
get money for every transaction of the stock. For the day trading the brokerage
cost is low compared to swing trading, where one holds the stock for few
days to get a better and higher price. Swing traders pay higher brokerage
compare to day traders due to their lesser transactions.
In general view, day trading is better than other trading as it completes
in a day. The other advantages being that one need not look for better prices
and wait for days together. Moreover, it involves less loss as the market
has lower and upper circuits for the securities to move beyond which the
stock does not go. Less brokerage cost is another factor. Then the important
advantage is when there are any change of rules in the market made by the
governing body after the market hours, or if there is a bad news about the
stock, or there are natural disasters that make the investors sell their
stock the other day, or there is a sudden decrease in the countrys economic
growth, these factors would affect the day traders since they would sold
their stocks already. If one does not sell the stock during the particular
day, he has to wait for the two or three days to sell. It has to come to
the traders account for one to sell the stock and in two days if it becomes
low then it gives a huge loss through the high brokerage cost and lower
value of the stock.
Many brokerage firms give the people many options for stock market day trading.
One is that a trader can get some investment from the firm for the investment
one makes, and would be allowed to trade with the total amount of firms
and his investment; however, one should remember that if there is any loss
incurred, it would be within the traders investment, and the amount would
be deducted from his account. The amount given depends upon the value the
day trader invests and it varies from one stock to another.This trading
is stressful and the traders get emotionally tensed during each trading
while buying or selling. It is generally advised to trade high volume and
popular stocks that have good trading report in the market so that the trader
makes decision easily.
Day Trading is done using computer or one can place a request to trade a
particular stock at the brokerage firm either in person or over the phone.
After purchasing the stock, one has to fix low and high prices, at which
he should trade the stock. The fixing should be made depending upon the
fluctuations of the stock. Only then smooth day trading would follow, or
it may end in loss due to incorrect fixing.The stock the touches the low
level and suddenly rises to higher level. At lower level if it touches one
has to lose money and lost its opportunity if it goes to higher level where
he has fixed it before. Most people watch the changes in the stock price
starting from the opening of market till ending over the computer. During
the stock market day trading, trader should check the attributes of a stock
to decide whether it is worth buying. The important attributes are liquidity,
volume, volatility, and price transparency.
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