Learning how to trade to stock markets – An explanation of day trading and the strategies involved for Trading Facts and Advice.
The term `day trading` and in general basic stock trading is put simply the purchasing and sale of various types of financial securities which can be stocks, currency, futures or options with the sole aim of generating some form of profit from the process. In reality and when examined in more detail day trading is slightly different to many of the other forms of trading that are available within the market place.
Day trading in its original form was only available to the large companies within the financial world like for example banks and so on. Now in the modern era and with technology increasing the availability of these markets due to the internet etc it is now possible for individual traders to have complete access to most of the market data and services of many of the large companies. If we take a broad overview of day trading we will see that there are many different styles within the process all depending on the personalities of the traders.
Below is a useful video of the most common 3 stock trading mistakes:
Some of these styles are short term trading which enables the trader to move stocks quickly and profitably as well as swing trading and finally position trading. Position trading allows an investor to hold a position for most of the day and provides a large amount of flexibility as the trader can have many positions open for short or long periods. You will see that some of these day traders decide to use multiple styles of trading where others will stick to and implement a single method depending on their choice of style. Don’t forget to check out our Learning resources page here.
A great video has been added below, showing a diverse way of how to trade the stock market:
Another key element to understand is that day trading has various types of trade available within it such as counter trends, ranging trades and of course trend trades. Trend trades are basically trades that take place in the direction of the various price movements of a market. Counter trends trading is the process of trading against the way the current price movements are going for example selling your stocks when the price is increasing. The term ranging trades is the process where traders see their investments go back and forward and are generally used when the market is moving in a sideways direction. There are of course many other variances included within each day of trading that play a key part to either failure or success.
There are many day traders who love to create as many trades as possible throughout the day without forgetting the ones who decide to wait for the perfect conditions before moving their trades. These cautious trades may only make one trade a day but with doing so lose out on many other opportunities but on the other hand this is the best way for them to keep total control over their securities. Always take a daily look at the Stock prices, here is a great UK resource for this: “London Stock Exchange – Prices”
With day trading like many other market strategies the key is to do your research on your investment as without it you could see large downfalls in your capital if you are not careful and thorough enough with your methods.
Additional Resources of Financial Interest are: http://www.ft.com/markets/