Day trading is one of the widespread strategies to make money. It can be a good job as long as you do it right. This is hard for beginners who do not have a plan yet and do not know how to make money on day trading.
So if you are thinking about making money on it, make sure you know you understand what day trading is and how it works.
We will introduce you to the basics and some simple steps that will help you start making money on day trading. So let’s begin right now.
Day trading basics
Day trading is the process where you close out all transactions before end-of-trading hours so as to find any available profits on differences in rates between trading instruments within that time period.
Day traders are typically well-educated, fundable individuals that use high amounts of leverage and short-term trading strategies in order to capitalize on small price movements. Day trading can occur anywhere but is most common within the forex market or stock markets where it has been seen as another way for investors with limited funds to access different investment classes through similar vehicles.
The most common strategies to use while making money on day trading are;
Scalping is a great way to take advantage of price changes in your favor by repeating this process over time. This means it is perfect for traders who need quick profits or even just want something more than traditional investing strategies like buy low/sell high.
News trading is a strategy based on the principle that you should buy assets with positive announcements and sell if there is negative news coming down.
Daily pivots strategy involves profiting from the daily volatility of a stock. The best time to do this is when prices are heading towards their lowest point during trading hours, so you can buy at that cheap price and sell later on for more money than what was spent if there is an opportunity.
The best thing you can do is to discuss everything with the competent broker to make the right strategy choice. Have a look at the top forex brokers in Nigeria as an example of the best ones.
How day trading works
Day traders are always looking for a trading instrument to move. They might buy assets if they are going up, short-selling them when prices fall so you can make money from that drop in value called “going against the flow’’.
Day trader strategies usually include both buying something high and then selling low as well as doing it multiple times throughout any given trading day.
Advantages and disadvantages of day trading
Let’s start with the benefits of day trading:
- affords traders the ability to trade anywhere in the world
- allows holding multiple positions at one
- provides opportunities to act fast and immediately on potentially lucrative market changes, as well as to use automated trading
some cons of day trading:
- wealth is more often accumulated through multiple small trades
- takes time and effort requires consistent analysis of market conditions
The article introduced the basics of day trading knowing how you can start making money on it. It also represented the main pros and cons you should take into account while choosing day trading. See a list of mt4 trading platforms which traders in Nigeria love.
George is the Chief Market and Broker Analyst at brokertested.com. Prior to being recruited by brokertested.com, I served SVS Securities as Chief Market Analyst for two years. Earlier, he joined Morgan Stanley in Nov 2013 as Research Analyst.
George is a well-rounded financial services professional experienced in fundamental and technical analysis, global macroeconomic research, foreign exchange and commodity markets and an independent trader.