How to get started with day trading

What is day trading?

Day trading is the buying and selling of securities (financial assets that can be traded) in an attempt to make money from short-term movements in the market. The aim is to enter when the security cost is low then sell when it’s high, and exit trades within one day so no securities are held overnight.

In comparison to long-term trading where trends are easier to predict and small shortfalls can be absorbed while waiting for assets to recover, day trading is high-risk with the potential for significant losses. However, that speed and volatility mean the possibility of quick substantial gains too.

How to start day trading

Thinking of getting started with day trading? You must research the basics of trading and have a full understanding of the risks involved, especially with the short-term acquisition of fast-moving assets.

As part of your education, you can use a multi-asset trading platform and online brokerages to get a view of the different markets that make up the trading landscape. Through this and other avenues, you can explore the different trading options and find those that you feel confident in.

Monitoring the market will also give you an insight into market trends, helping you to make better judgements when you begin your day trading journey. Spend time analysing the market to become familiar with how often and how dramatically things move and to identify potentially suitable stocks.

Finally, set a budget and be strict about not exceeding it to make sure you stay in the black. Stick to small purchases, especially in the beginning, until you’ve got the hang of trading. This will help to minimise the risk of incurring major losses.

Common day trading strategies

One of the most common day trading strategies is to focus on liquid markets like forex and stock. Liquidity is the ease at which currencies can be bought and sold, and more liquid markets best suit the fast-paced nature of day trading.

You can exchange currency pairs in forex trading, with exotic pairs providing the best chance of profit from sudden spikes. When playing the stock market, range-bound assets – which bounce from low to high rapidly and regularly – have the potential to be the most beneficial for day traders.

Staying up-to-date with the most recent market trends will help you to hone your strategies from week to week and month to month even if not daily. It will help guide you towards stock rapidly rising in value and to anticipate for how long that momentum may continue.