When someone says day trading, he/she means buying and selling stock within the same day. To understand fundamentals of day trading, consider yourself a merchant in the market and by the end of the day you have to re position yourself with no stocks.
What does a day trader do?
Day trader performs the following tasks:1. Trade for stocks several times a day thus squiring a fraction of profit. The only compulsion is by the end of the day traders have to close all their position.2. Day trader usually capitalizes movement of money within one trading day.3. Day trader have a different role than investor, investor invest money for long time whereas day traders have to trade within hours, minutes and even seconds.
Why day trading?There are several advantages of being a day trader.1. Increased Leverage – Greater leverage on trading capital due to low margin requirement. 2. No Overnight risk – Since trading closes the same day, next day events do not affect you.3. Market Direction Profit – Make best use of fast declining markets and use it when prices are high.
Day trading is difficult to master but with the appropriate techniques and skill a day trader can make good margin.