Day Trading

What Is Day Trading?

Day trading is defined as a type of trading in which traders open and close s market position before the end of the day’s trade. This type of trading is usually a short-term market position with traders hoping to close a buy or sell position as quickly as possible.

Deeper Definition

The emergence and the rapid adoption of internet technology in the financial and trading sector have made it much easier for a group of traders called retail traders through ECNs (Electronic Communication Network) to trade the financial markets. Before the adoption of the Internet, this was not possible. A retail trader is a type of trader that trades from a private or individual account. They are pretty different from a positional trader. The day trader or retail aims for marginal profit each trading day and hopes to build on subsequently to a more significant profit. 

Day trading check market movement for any entry position using 4hrs, 1hr, 30min, 15mins up to 1minutes times frame. It is all about following the present market price action that is visible for the moment. This is called the trend. For example, if the mediate trend is a buy, Day traders would follow the immediate trend to profit.

Day trading is founded on volatility; it is not suitable for commodities that are not volatile. Market volatility is defined as quickly price changes within a specific time, and a market is volatile when the market changes remarkably within a short time and vice versa. It is all about buy selling within a day, it favors commodities that changes price many times within a day.

Day trading is not too easy. It is based on a fixed strategy. Due to the market fluctuating significantly throughout the day, the chances of losing money are very high. And so to be successful it is all about sticking to specific rules and sound psychology.

Day Trading Example

Day trading is possible on any form of the financial market, and that’s cryptos, forex, and stocks.

For example, a day or retail trader may trade a commodity like Gold or any stock; if the commodity signals a bullish trend on the 1hr, 30min, and 15mins timeframe, a day trader would enter the trade for a buy and then close later.