This is how day trading works, according to experts


What is day trading?

Day trading is the buying and selling of a specific financial instrument, mainly a specific stock or currency pair, within the same day. Because of the volatility in the stock market and the forex markets, these are the two most suitable markets for day trading. Forex trading is used to generate profits on a more short-term basis when done successfully.

How forex trading works, according to experts

While the basics of day trading seem simple at first, just buy a stock and sell it the same day when the price goes up. In reality, over 90% of investors who start this type of trading lose money and eventually give up.

Most experts don’t go the long and painful long-term investment route. You have acquired the right knowledge and, through experience, developed tips, methods and techniques to be successful in day trading. In this section we explain the basics of how day trading works from the point of view of the experts. This way, you benefit from valuable material that would have taken you years to create.

The first thing you need to be successful in day trading is to be in control of your emotions. If you invest money you earmarked for important things like your children’s education, forget about it. The more you focus on the money, the greater your chances of making emotional and sudden decisions in this market. Therefore, in order for Forex trading to work for you, you need to think coldly. The first thing experts have is a plan of how many trades they want to make in a given day, how much they can afford, losing and exiting strategies on successful and unsuccessful trades. Because of this, they are called experts, know the variables surrounding their trading sessions, and have a plan of action for every scenario that might come up in the exchange.

Experts know the math of day trading, which is summed up in the fact that you must beat your losses with your profits plus a margin. Put simply, if you invest $ 100 and the stock is down $ 15, it means that a given stock is down 15%. If the stock is now at $ 85, it would have to rise more than 17% to get back to $ 100. This is not a zero sum game. For every loss you have, you must exceed the percentage of your loss to get your money back. You can stay one step ahead of the game by using an appropriate stop / limit ratio on all of your trades.

Day trade experts don’t trade every day. In fact, they are waiting for the occasions when they are more likely to win in the end. Again, this requires emotional control. Indeed, this is their secret. They will only act when they see that their probability of winning is at least 2.5 times higher than their probability of losing.

Benefits of day trading

· You can have money to spend almost every day making profits instead of waiting for years as some trading strategies suggest.

· If you have less than $ 8,350 in profits day trading, you will be taxed at a lower rate than the average income tax rate.

· It allows you to learn how to trade faster as you will be making many trades in any given day as opposed to the usual 1 or more trades per month in long term trading

· It is emotionally uplifting in the short term for successful traders.


Source by Patrick Sekhoto