Day Trading Basics

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Day trading relates to the buying and selling of securities to take advantage of price fluctuations during a trading day. Traders speculate on securities, derivatives and currencies which are bought and sold within a very short period.

When you engage in day trading you envisage to profit from small price changes within a day. Depending on the length of time between purchase and selling transactions, as well as different terms used. The transactions are often conducted as one-second arbitrage trading.

Scalping is a form of day trading, and the speculations are typically based on very short durations. Which dabble on the spread (gap), to make profit. Market imperfections arise from the fact that there is a difference between supply and demand called the spread.

When traders buy frozen assets at the offer price and sell at the price of the application, they sell directly after a few seconds or simultaneously. Because certain positions fluctuate wildly in a short time, it is advantageous to resell or buy the shorted securities within minutes. In some very small intraday movements a lever is often used.

For most markets, the intraday trading would be unattractive without leverage, since this could render profiting from the transaction impossible. The use of a lever in trading also means there are greater risks, thus a detailed risk management is very important. Some trading houses employ day traders. While the introduction of broadband internet also makes it possible to act from home.

Day traders use strategies that range from a few to several thousand transactions per day. The time it takes to keep a position varies between seconds and hours. However, research suggests that many traders make losses.

Day traders rely on technical analysis, apparent orders in the order book or movements of other related effects for taking decisions to buy (go long) or selling (going short). Of no small importance in this context is the level of transaction costs. American suppliers are usually content with packages ranging from $10 to $ 20 per transaction.

Banks in some countries frequently fix commissions to the settlement of a purchase or sales contract. Depending on the contract, they are levied on the customer as a significant price difference, which affects the net profit from day trading transactions. The market operators rely on large quantities of transactions and make their commission on the difference in prices of assets on the same day.

And look mainly at two aspects – the liquidity and volatility and pass an order of award. By the end of each trading day, all positions taken in the day are closed. Thus from one day to the next, if there is no commitment, capital remains fully available for the following day. All open positions are closed before the end of trading, so that no risks are incurred.

 

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