Day trading is referred to the selling and purchasing of the financial assets and instruments like the currency, stocks, futures in a single day which has a goal of making profits that differs form the purchasing and selling price. Day trading differs from other trading systems where the positions usually have the same day opening and closing of the trade. Many day trading has flexibility that are sold and purchased within a day with the profit that lasts a few minutes or few hours of the trade, this totally is depends upon the process of trading.
The day traders are those people who deal with the system of trading. Some of the points that the trader should keep in mind while doing the day trade to make it successful are:
- Knowledge and experience
- Business plan
- Tools of trading
Knowledge and experience
Knowledge and experience in trading is the first and foremost point that qualifies a trader. A day trader should have qualities as understanding in a broad way and be experienced in the market fundamentals. He must have the ability to gauge the sentiments of the market. To have this ability the day trader should do constant research and keep seeking the current information with the help of internet.
Traders should keep in mind that it takes money to make money. This simply means that to be successful in day trading you should have a huge amount of capital. This increases the chances of potential returns.
The market volatility is usually high in a single day. It is important for a day trader to be disciplined. They should have control over their emotions and act impulsively.
Trades are regarded as business. It is necessary for every business to have a business plan so do the day trades. Taking some factors in consideration is important in day trading.
Tools of trading
To become a successful day trader following the right technical tools is important. The right technical tools will help you get into the good trades and helps in getting rid of the bad trading systems. All that is needed are reliable and powerful indicators as well as tools. That helps in cross verification from the pattern of chart.
These attributes are necessary to become a day trader whether he works as a full-time day trader or the part time. There are three types of day traders:
- Retail day trader
- Institutional day trader
- Auto traders
The retail day trader work for themselves, they also work in partnerships with the other traders. The traders under the retail trade with their own capital. The day traders of the institutional work for financial institutes. They have some advantages over the retail trades. The advantages the retail day traders get are large availability, fresh fund flows, large amount of leverage and capital etc. They have a team that supports them for the trades. The auto traders are the trades in which the computers are used. This trade takes place with the help of computer algorithm, this trade is also known as algorithmic trade.