Day trading

What is day trading?

Day trading is a name used for different types of short term speculating on the market. Day trading can be a profession but it can also be something you do part time to earn extra money. The day traders goal is to make a large amounts of trades each day to benefit from the constant fluctuations on the stock market.

Day traders can either invest large amounts of money directly in different assets or they can use different financial instruments that allows them to assume leverage positions to make a lot of money from smaller positions.

Leverage positions allow you to make large profits (or losses) from small market movements. The higher leverage you use the larger profit (or loss) you can make from the same market movements.

Day traders commonly trade stock, currencies, commodities, CFD certificates, options and binary options.

day trading

How does it work?

It is hard to explain how day trading works because there are so many different methods that can be used that all are slightly different. They all relay on different strategies, different financial instruments and different methods to predict future market movements. One of the most common methods used when day trading is to trade CFD certificates based on TA (technical analysis) but there are many other methods used as well.

What all methods and strategies have in common is that they are designed to allow the trader to earn a lot of money from the daily volatility of the markets. All day trading methods are designed to allow the trader to make money in any market condition as long as there is volatility in the market. It does not matter if the market goes up or down. A day trader will be able to make money either way buy using different instrument and strategies.

Most day trading strategies are based around leverage which allows them to earn a large profit from small market movement. Lets say you make a trade with 1:30 leverage. This allows you to make a 15% return on a 0.5% market movement. Something you can often observe several times a day. Larger leverage can allow you to make even more money on even smaller fluctuations. Some day traders use leverage as high as 1:500 which allows them to make a good return on extremely small market movements.

Using high leverage is extremely high risk.

Can you earn money?

Yes it is possible to make a lot of money day trading and there are plenty of fabulously rich day traders out there. There are plenty of day traders that makes millions each year. The fact that you can make money does however not mean that it is easy. You need to be a dedicated and skilled trader to become a successful day trader. It is not hard to become a skilled trader but it is not easy either. You have to think about it as a profession and devote a lot of time to it if you want to be successful.

I recommend that you read everything on before you decide if day trading is for you or not.

Who should trade ?

Day trading is not for every one. To say anything else would be dishonest. You have to be a special type of person to enjoy and find success day trading. The most important skills that you needs as a day trader is to be able to handle stress well and be able to stay disciplined regardless of what happens. You need to be able to stick to your strategy even if you see other alluring trades. You do not have to be a maths genius to become successful but it does not hurt either. Being mathematically talented can make it easier to analyse the market but there are many ways to do this and not all of them are based in maths.

The single most important quality you need to become a successful trader is that you need to enjoy the work. That is the only way you are gong to be able to put in the hours necessary to become successful. If you hate it you are unlikely to dedicate yourself to it enough to become successful.

Is it a scam?

No, Day trading is not a scam but there are a lot of products targeted towards beginners that are nothing more then scams. This include trading secrets and different types of trading signals.

Do you recommend?

No. I do not recommend day trading. It can be a good way to earn money but only you can decide if it is right for you. I do not know you and I do not know if you are suitable for day trading or not.

If you want to try it then my advice would be to sign up for demo accounts with different brokers. This will allow you to try day trading without risking any real money. If you like it, and are good at it, then you can start trading for real money.