A process where the buying and selling of shares have been done on same days is called day trading. The day traders want to make profits by making a large amount of capital. It can be a risky game for the novice person in the stock market. We are offering some strategies to enter into this type of market.
- Strategy to entering – There are some securities are made for day trading as well. A typical day trader searches for two things in the market volatility and liquidity. The liquidity position allows you to enter and exit the market in good condition. The volatility simply measures of the expected daily price range in which the operating activity has been done by day trader. The increase in volatility means good profit and loss.
- Searching for a target – Your trading style will decide the identification of a price target. There are few tips for identification of a target.
- Scalping – It is one of the famous strategies which says immediate selling after trade becomes more profitable. Here the target of the price is just after attainment of profitability.
- Fading – It means shorting stocks after rapid moves upward. This is very rewarding kind of strategy in which the target price when the buyers are stepping in again
- c. Daily Pivots – It involves profiting from stock daily volatility which can be done by at the low rates and sell at the highest price of the day.
- Determining a Stop Loss – When a person does trading in margin then he becomes sharper than regular traders. Therefore stop losses which are designed to limit losses in a secure position which is a crucial part of day trading. There are two stop losses
- Physical Stop loss – It is placed at some level which suits your risk tolerance. It is the most you can lose.
- Mental stop-loss – It is stop-loss where your entry criteria are violated. It means if the trade makes an unpredicted turn and you will exit from your position immediately.
The day traders of retail business also have another rule set the maximum loss per day which you can face both financially and mentally. At the time of reaching this point, you can take the day off. The new traders have to face the loss sometimes before the finishing of the day and end up with extra risk.
- Performance Evaluation – There are many people get into day trading business to make the high amount of
returns annually with minimum effort and less amount of capital. The real position is that many day traders face loss in this business. But some earn huge amount of returns by using the good strategy which enhances the chance of overcoming the situation of downfall. So the evaluation of performance is the tough task which is not possible by tracking percentages for gain and loss. It is very necessary to follow your strategy rather than chasing the profits in day trading.