The Basics Of Day Trading

Day trading, as the name suggests, means trading-buying and selling-the stocks on the same trading day. The trading positions, usually though not always, are closed before the market closes for the trading day.

Day trading is different from after- hours trading where the trading activity continues even after the regular marketing hours when the stock exchange closes.

Sellers and buyers who participate in day trading are called day traders. Although day trading evokes the image of a hectic trading activity in course of the trading day, it may not be so in actual practice. You may make several trades, say a dozen, in course of a trading day, or, you may limit yourself to just one trade.

You may, in some cases, just buy a stock on one day and sell it on the next day, if you think that selling it on the same day would not prove profitable. There is no legal restriction such as that you must finish off your trading activity the same day. You may, at the most, have to pay some differential on brokerage if you carry your trade to the next day.

In standard practice, traders usually tend to close their trading positions by the end of the same trading day. In any case your trading frequency depends entirely on your trading strategy for that particular day, or, your general trading style and outlook.

There are traders who focus on very short or short term trading. They finish off their trades in a matter of few minutes or even seconds. Such traders buy and sell several times a day and usually their trades consist of high volumes. They are the favorites of the brokers who reward them with big discounts on commissions.

Some traders, however, do not hanker after reduced brokerages. They focus on momentum or trends of the stock movement. They are very patient during their wait for a strong move, which may occur during the trading day. Obviously such day traders make only a few trades.

There are traders who prefer to sell off their stocks before the close of the market day to avoid the risks arising out of the price gaps between the closing price on the day they bought a stock and its opening price on the next day. They consider this practice as a golden rule and follow it almost religiously.

Other traders believe in allowing the profits to run so they stay with the position even after the market closes.

As said earlier, the number of trades you make on a trading day depends upon your trading style or trading strategies.

Profits and risks in day trading

Day traders make quick bucks and also quick losses in a matter of minutes or at the end of the trading day. Day trading may evoke the visions of gamblers gaming in casinos. There is, however, a marked difference between day trading and gambling.

While, you cannot make any calculated moves or devise any intelligent strategies in gambling, except when you are out to cheat others, day trading involves very serious understanding of the process of trading.

You study the general market trends and the movement of the stocks. You make fundamental and technical analysis and keep yourself abreast of the latest news flashes about the stocks of the companies that you trade in and much more.

Day trading is not playing a blind man’s buff or just throwing away a dice. You have to be very alert and cautious before every move. It would, therefore, be unfair to call day traders gamblers or bandits as some frustrated losers in day trading are apt to do.

Thousands a Day – Day Trading Stock

Day trading stock, at this level of profitability, is obviously unique.

Unlike other individual financial instruments traded, there are thousands of stocks to choose from, any one of which can provide day trading opportunities (otherwise known as big money wins) – any trading day, at any time of the trading day.

This makes stock day trading exciting, and for those who know how, extremely rewarding. For those who master the new stock day trading game with a coach in a winner’s stock trading room, the opportunities for learning, not just stock trading, and wealth building are unlimited.

What is the big payoff that everyone seeks?

To become a successful day trader, with profitable business performance, where they can make thousands a day, any trading day.

What’s required to generate this kind of money in the stock trading business?

Of all the success factors, it comes down to three key elements:

First, you must stop trading on your own and start trading with a world-class stock trading coach (like a world-class tennis player learning and performing with a coach to get to and stay at the top of the game)
Second, you need to be playing (trading) a winner’s game (system) that your coach recommends, not an old-school game, but a stock trading game big money winners play
Third, you need to gain the confidence, competence, and performance results consistent with those of a stock trading winner, again, facilitated with your own personal coach at your side.

Here’s a look at one aspect of stock day trading, from a winner’s perspective.

While day trading, it’s the job of the winning day trader to find stock trading setups – stocks that present opportunities to make substantial money – what we refer to as stocks in a “tension” state.

A stock in a tension state is simply a stock with an intraday price movement substantially away from its price balance price or the price at yesterday’s close, technically speaking, when you view stock trading charts.

Viewing a stock in a tension state would be much like viewing a pendulum with the ball pulled far away from neutral enough that, when released, it’s movement tends to accelerate toward its neutral position and beyond.

Stocks, like the pendulum ball, tend to seek a balanced state as well and like the ball, they return to balance and beyond, and then fluctuate above and/or below a neutral price as they eventually return to a state of neutrality, balance, or non-tension state – above, below, or close to the point of beginning, price wise.

This is the price action winning stock traders live for and thrive on, day by trading day.

This new-school trading makes winners feel both fulfilled and alive. Let’s take a look.

The winner’s focus is to trade this action to win (not the money involved) one or more trades during the trading day – that can generate $500 to $2,000 and more per trade, depending on lot size (the number of stock shares traded). This form of trading to win, that is, absent the focus on the money while trading, is not to be confused with gambling which is what losers love to do at Las Vegas and while day trading stock or any other financial instruments.

Trading on your own, without a coach, using any of the hundreds of old-school, gambler’s stock trading systems, lacking stock day trading confidence, competence, and a history of success while day trading is precisely why we say that 98% of all traders are losers – not profitable and otherwise dissatisfied traders.

Thus, only 2% of traders worldwide fall into that category of day trader – winners, consistently profitable winners.

Winners own the game – the rules, the software (with algorithms reflective of losing trader knowledge and trade execution patterns), when they make markets and stock prices move the most.

We designed our game to ride the coat tails of the 2% (who are intent on “killing” the crowd, the 98%), for our fair share of the action.

So, there are three games being played in the stock market, options, commodity, Forex, or any other markets: the winner’s game, the loser’s game, and our game. (We only trade stocks.)

Day trading stock this way, we find, is a far more interesting and relatively stress free approach to the day trading losers are accustomed to experiencing.

Stock day trading involves the performance of an individual company or companies, many times with familiar products and services exchanged locally and globally, in many instances involving companies managed by recognized leaders in their field.

Both technical and fundamental data influence stock investors, swing traders, and day traders execution decisions.

Each stock has both a technical (long and short-term price action history – charts) and a fundamental (financial performance – balance sheet, profit and loss statements, and earnings histories). This opportunity to trade the price action on any of thousands of stocks, any trading day, and time of the trading day, makes trading stocks far more interesting, and frequently more challenging than other form of day trading.

So, what we do as stock day traders is far more interesting, exciting, and very financially rewarding.

Our system is also quite simple as we only focus on only 20% of what losers watch, trade a fraction of the time and thus experience a fraction of the trading stress, and as such, we have the energy to trade well when opportunities present themselves.

The game has changed, so have we, and so can you – should you qualify.

John McLaughlin, Stock Trader Consultant / Coach / Mentor

What Are Day Trading and Swing Trading? What’s the Difference?

Day trading or swing trading refers to the practice of buying and selling multiple stocks within a single day. It is the perfect vehicle for the short term intra-day type trader, who would like to hold on to a position for a short time, a few minutes or a few hour, and squares their positions prior to the end of the day.

Day Trading

The stock or futures day trader is someone who is making trades intraday. They tend to do this with frequency throughout the day. A day trader may trade a few times per day or dozens of times per day.

Swing Trading

The swing trader could be a stock, option or futures investor. This type of trader is looking to take strategic bites out of the stock market that can stretch over a day or multiple days and weeks.

Long Term Swing Trading

The long term swing trader is very much like the regular swing trader, the only difference is their focus is on weeks and months as opposed to normal swing traders who focus on singular days.

Day and swing trading involve taking a position in the markets with a goal of squaring that position before the end of that day.

A day trader typically trades several times a day looking for fractions of a point to a few points per trade, but who close out all their positions by the end of the business day.

A swing Trader has slower cycle of trades, meaning less trades to make, therefore fewer commissions, but also less chance of mistakes and an increased ability to “snag” the more significant multi-day profitable swing trades.

The goal of a day or swing trader is to capitalize on the price movement within a market trading day.

Unlike investors, a day trader may hold positions for only a few seconds or minutes, and never, ever overnight.

What Day Trading really means?

“Day trading ” is a widely misused and misunderstood phrase or term. Officially day trading means to not hold on to your stock positions longer than the current trading day; simply put, not holding any stock position overnight. this is really the safest way to day trade, because you are not exposed to any of the potential losses that can occur, while the stock market is closed due to news that could affect the prices of your stocks