Talking about day trading, the term means buying and selling of stocks or indexes within the same day
. Doing so, can be profitable for some and a matter of loss for others. The fate entirely depends upon your skills and knowledge about the market. To gain profits in the Day Trading System, people gather a large amount of funds so that even a small change is the price can help them collect a considerable amount of money. Here are a few strategies which can be of great benefit to the beginners who enter the market.
Strategies for entry: Stocks which show more volatility and liquidity than others are the perfect ones for day trading. A few tools that you can use in this regard are Intraday Candlestick Charts, Level II Quotes/ECN and news regarding the movement of the stocks and indexes.
Scalping: It is a smart strategy where in the person trades off his stocks as soon as he makes a profit. In this way, he does not wait for the day to end. This is true in the case of first hour trading wherein a similar pattern follows.
Fading: This strategy involves shorting of stocks when they rise. The assumptions made in this regard are many including that the stocks are overbought or the existing players are afraid to buy the stocks etc. Though this strategy is touted as extremely risky but the benefits and gains resulting out of it are immense and can enhance your gains.
Daily Pivots: This strategy of daytrading means to buy stocks when their prices are at an all time low (LOD) and is sold when the price is at its highest (HOD). The trick in this strategy is to take advantage of the volatility of the stocks.
Momentum: This strategy involves trading of stocks following the latest news on the movement of the stocks. This means to buy stocks when the trend starts increasing and selling it off at the first sign of trend reversal.
For some, it is loss and for others, it is profit. Beginners need a proper Day Trading Strategy before they enter the market. With a strategy in place, it will be easier for them to understand the functioning of the market. They will also be able to identify the kind of stocks which will give them instant as well as the greatest profits in day trading.