Day Trading

The term "Day Trading" refers to the act of buying and selling a stock within the same day. Day traders seek to make profits by leveraging large amounts of capital to take advantage of small price movements in highly liquid stocks or indexes. In Forex, Day-Traders usually make full use of the highest possible leverage to Day Trade.

2 Things Day Traders look at

Volatility - Greater Potential Profit or Loss

Liquidity - Tight Spread, Low Slippage, for Traders to enter and exit at good prices

Day Trading Strategies

Scalping - Scalping is one of the most popular strategies, which involves selling almost immediately after a trade becomes profitable. Here the price target is obviously just after profitability is attained.

Fading - Fading involves shorting stocks after rapid moves upwards. This is based on the assumption that (1) they are overbought, (2) early buyers are ready to begin taking profits and (3) existing buyers may be scared out. Although risky, this strategy can be extremely rewarding as the bulls climb up the stairs while the bears jump out the window. Here the price target is when buyers begin stepping in again.

Daily Pivots - This strategy involves profiting from a stock's daily volatility. This is done by attempting to buy at the low of the day and sell at the high of the day. Here the price target is simply at the next sign of a reversal, using the same patterns as above.

Momentum - This strategy usually involves trading on news releases or finding strong trending moves supported by high volume. One type of momentum trader will buy on news releases and ride a trend until it exhibits signs of reversal. The other type will fade the price surge. Here the price target is when volume begins to decrease and bearish candles start appearing.