Trading Ideas

Day  trader Is a trader who buys and sells financial instruments (eg stocks, options, futures, derivatives, currencies) within the same trading day such that all positions will usually be closed before the market close of the trading day. This trading style is called day trading. Depending on one's trading strategy, it may range from several to hundreds of orders a day. Investors cannot, however, participate directly in the exchange and can participate only through members of the exchange, popularly referred to as brokers.


Day  trading The term "day trading" is a widely misused and misunderstood term. Real day trading means not holding on to your stock positions beyond the current trading day; in other words, not holding any position overnight. This is really the safest way to do day trading because you are not exposed to the potential losses that can occur when the stock market is closed due to news that can affect the prices of your stocks.

Unfortunately, many people who claim to be "day trading," hold stocks overnight because of fear or greed, thus setting themselves up for the catastrophic elimination of their capital.


Advantages of Day Trading

Zero Overnight Risk: Since positions are closed prior to the end of the trading day, news and events that affect the next trading day's opening prices do not effect your portfolio.

Increased Leverage: Day Traders have a greater leverage on their trading capital because of low margin requirements as their trades that are closed in the same market day. This increased leverage can increase your profits if used wisely.

Profit in any market direction: Day trading often will utilize short-selling to take advantage of declining stock prices. The ability to lock in profits even as markets fall throughout the trading day is extremely useful during bear market conditions.

Dis-advantages of Day Trading

You are taking a directional call.  You short a scrip thinking it will go down !  You buy a stock thinking it will go up.  Please note that if the market behaves in opposite direction you will lose everything.

Losses - If you do not keep proper stop loss limits you are likely to lose heavily in case the market turns against your positional calls

Expenses - If the service provider is charging more brokerage it is advised to switch while you are trading higher volumes

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