All you want to know but never asked about the stocks and options markets.

jueves, 9 de enero de 2014

What is daytrading?

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Day trading is a term that refers to the purchase or sale of financial instruments or assets like stocks, currencies, futures or options on shares to close the position in the same day.  This type of trading is considered one of the most risky because market movements can be quite erratic during the day, which can lead the trader to suffer multiple losses in a single session. However, it also provides the ability to open and close multiple transactions in a day

For the stock market, perform day trading is largely based on bet on the stocks price and its value at the end of the day (if the value will decrease or increase). Although day trading also includes short-term operations, including scalping. Using a broker that provides the data in real time and an internet connection we reach this type of commercial activity.

If a trader decides to use this trading style to make fast trades in the stock market, it is best to hire the services of a broker who offers an account that includes a demo account service. In this way the trader will practice and learn the basics of daytrading, how the market behaves, and when the best opportunities to make winning transactions are presented.

In day trading we must design a trading plan to avoid excessive risk, ie based on experience and "financial instinct" the trader should follow a plan as a guide to make the best decisions at any time. Many beginning traders become overconfident just because they have won large amounts within weeks and continue gambling compulsively, and when they experience losses (in trading losses will occur sooner or later) they decide to continue without any limits on their trades. For this reason a winning streak can become a lossing streak very quickly in day trading.

To succeed in day trading is necessary to consider that the time does not necessarily mean money, that kind of mentality is that the person who made ​​fortunes with this type of activity is not allowed. The traders must spend several hours in front of a screen watching the markets trying to find new opportunities. Sometimes the market offers multiple possibilities to earn money but sometimes are erratic and it is best to stay out. If we consider that we will recover the time spent in front of the screen as money in no time we are wrong, this kind of thought is comparable to sitting in front of machines gambling casinos hoping to get lucky and win big money at the end day.

Decisions based on our trading plan should be those that provide more benefits, we must also consider that in the changing market environment is not only important to be aware of the daily price movements but it is also essential to be aware of changes in the economic sphere that can radically change the market behaviour because everything is connected. Relying too much on the contracted broker is also an error that much commits to them the benefits they do day-trading Trader as well get more profits. In day trading the trader must follow any major event that may cause changes on a daily basis because these can occur quickly. In this sense, day trading can be more demanding than other styles of trading

Day-trading requires a mind open to changes, psychological pressure, market noise and srtess. This activity can provoke mental blocks if we are not aware of all the elements involved in it and that the slightest change in any market conditions can produce significant gains or losses in day trading transactions.






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