What Is Day Trading: Things You Should Know

Day trading seems attractive to many people and it can definitely be quite profitable when you know what you are doing. There are some things you have to keep in mind to decide whether this is the right trading for you. Whether you are interested in online CFDs trading or other types, you can learn more about day trading in this article.

Peculiarities of day trading

According to investous the main thing that makes day trading stand out from other alternatives is that it is a trade, which is opened and closed in a single day. It is possible to hold positions anywhere from seconds to hours.

It depends on a trader’s decision whether they want to hit certain profit targets or wait almost until the market closes. Day trading requires you to be certain about how an instrument will do until the day is over. Also, you have to understand how different market players will behave.

Which day trading markets are available?

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The markets that are popular among day traders include:

Strategies in day trading

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Developing the right strategies based on the accurate analysis of the market is something that can bring success to a trader. There are many strategies available out there, but all of them can be changed and adapted according to the specific situations:

Momentum

With this strategy, traders hold positions for the duration of the momentum and use an automatic stop loss to fix their profits. It is important to correctly identify patterns to see the momentum.

Chart patterns

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There are classic chart patterns available that can be used in day trading. A position will close when a particular price target is achieved. One of the most common chart patterns is the candlestick one.

Trend following

This strategy requires you to use trendlines or similar indicators to find trends. It is a great method at times when a daily range expands in moments of volatility.

Scalping

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While using a scalping strategy, traders are focused on finding disbalance in supply and demand. This allows them to earn on the quick price changes.

Reversals

During this strategy, traders use indicators and patterns to discover profit targets and potential reversals. Reversals can take place when a certain trend changes its direction or this is something that can happen within a trading range. This strategy can be highly profitable when trading short term.

Day trading – an excellent choice for beginners

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If you are still learning about trading and you don’t have much experience, day trading can be a good place to start. Compared to other options, it offers a good reward to risk ratio thanks to the fact that you risk only a small amount during a day. At the same time, the potential to earn is still there.

It is important to choose the right asset based on your interest and knowledge, so you can increase your chances of making a profit. Do you have any experience with day trading? What are your thoughts on it? Tell us what you think in the comments below!

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