By Anne Anderson
Buying and selling stock, options, or commodities during the same trading day is termed as daytrading. This trading was initially done by financial companies and professional investors however today it can be done by any investor working from home itself. With growing technology daytrading has become very popular among traders.
Earlier, daytrading was done by brokers who placed orders through a specialist on the floor of the exchange. These specialists would match the buyers and sellers and transfer the stocks and give the info to both the brokers. A commission with a flat rate of 1% of the total amount was charged in this deal. However today the discount brokers have lowered their commissions and are making short term trading much more profitable for the investors.
Few strategies have come up for getting better returns from daytrading. Trend trading, Contrarian trading, channel or Range Trading, scalping trading and trading rumors and news events are some of the common strategies which are being followed for trading. In trend trading you believe that the stocks that are rising will continue to rise, or the stocks that are falling will continue to fall. Based on these you continue trading till the time the price breaks the trend.
In trend trading the investor assumes that the stock that is rising will continue to rise and the stock that is falling will continue to fall. Buying and selling is done on this basis till the time a change in price gives a break in trend. Contrarian trading is another strategy which makes the trader believes that if the prices have been rising or falling at a high rate of momentum they will reverse and start going to opposite direction. Trading by this strategy makes you invest in the opposite direction to most of the traders.
The third strategy being used in the market is channel or Range Trading. In this method it is assumed that the stock’s price will continue to trade inside of a price range or channel. Trading by this strategy will make you buy when the price are at the lower end of the channel and sell when the price is at the upper end of the price range.
Then comes the scalping strategy where profits are taken when small gaps expand and contract between the bid and the ask price for a stock. By this strategy you can get benefits of market inefficiencies using speed and high trading volume to get quick profits.
Strategy of trading rumors and news events is also followed by daytrading investors. In this several real-time news and events help you to make split second decisions for buying and selling stocks. The news and events create a large amount of volatility and high emotion which can be used if traded in a proper way.
Daytrading has today become very easy and profitable way of getting returns however the market is very volatile and can also result in losses if traded incorrectly. Today many people have become consistent and comfortable in doing daytrading. If you are a new investor then before investing in the market search for websites that teach you the right ways of making money from the markets. The firms and companies holding these websites have very experienced and knowledgeable traders who can teach you right strategies for daytrading. Go to these sites learn the right strategies of trading and become a wise investor minting money from the market. – 33822
About the Author:
Learning daytrading is very basic for the stock market industry. Anyone who wanted to invest on this business must make sure that he understands this. Day trading software is another aspect of the business that he needs to learn.