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Day Trading
Trade FrequencyProfit and RisksHistoryFinancial SettlementElectronic Communication NetworksTechniquesTrend followingContrarianRange tradingScalpingRebate TradingNews PlayingTrading EquipmentBrokerageCommissionSpreadMarket DataRegulations and restrictions
Trade FrequencyProfit and RisksHistoryFinancial SettlementElectronic Communication NetworksTechniquesTrend followingContrarianRange tradingScalpingRebate TradingNews PlayingTrading EquipmentBrokerageCommissionSpreadMarket DataRegulations and restrictions
Trade Frequency
Although collectively called day trading, there are many sub-trading styles within day trading. A day trader is actively searching for potential trading setups (a stock or any other financial instruments that, in the judgement of the day trader, is ready to move in price with a potential for a substantial profit. Depending on one's trading system (game), strategy, the number of trades the trader can make a day may vary from none to dozens.Some day traders focus on very short term trading within the trading day, in which a trade may last seconds to a few minutes. Day traders may buy and sell many times in a trading day and may receive trading fee discounts from the brokerage as a result, as a trading bonus.
Some day traders focus only on price momentum, others on trend patterns, and still others on an unlimited number of strategies they feel are profitable. Winning day traders find they must learn to be more patient for the opportunity to ride on the strong move, that may arise at any moment.
Day traders exit positions before the market closes to avoid any and all unmanageable risks - negative price gaps (differences between the previous day's close and the next day's open price) at the open - overnight price movements against the position held. Day traders, like all traders, have their rules.
Other traders believe they should '''let the profits run''', so it is acceptable to stay with a position after the market closes.. Once you get hit for a 10 to 20% overnight loss, your swing or investor trading life will likely be altered forever.
Day traders often borrow money to trade. This is called '''margin trading'''. Since margin interests are typically only charged on overnight balances, there is no cost to the day trader for the margin benefit.