| First, let us define day trading. Day trading is buying | | | | Investors can also keep the following in mind during |
| and selling of securities or stocks in a single trading | | | | day trading.i) An investor needs to determine the |
| day. Day trading can be practiced in any stock | | | | major trend of the day. When the market is on |
| market place, but is most commonly seen in the | | | | uptrend, only buy-side trades can be entered, and |
| foreign-exchange (FOREX) market. A day trader is an | | | | vice versa. This trend is generally established during |
| investor who makes a short-term investment based | | | | the first part of a trading day.ii) An investor also |
| on speculation. A day trader chooses stocks based | | | | must know the short-term trend of the market |
| on market momentum. Typically, day traders are | | | | within the major trend of the day. This determines |
| well-educated about the stock market basics and | | | | the market corrections that need to be made while |
| have good amount of capital to be invested. They | | | | day trading.iii) It is also very useful to determine the |
| utilize short-term trading strategies to gain of highly | | | | entry and exit points in the market using various day |
| liquid stocks. Day traders bring efficiency into the | | | | trading indicators.o Access to News Source and |
| stock market to keep them up and running and | | | | Analytical Software |
| provide markets liquidity. | | | | Information about the money market is an important |
| Many argue that day trading carries with it a huge | | | | prerequisite to successful day trading. Access to |
| amount of risk and the profits made out of day | | | | news channel and websites that keep an investor |
| trading is not comparable to the risks associated with | | | | updated on the important stories in the stock market |
| it. Despite the controversies associated with it, day | | | | is very useful to day traders. There are also various |
| trading can be done successfully based on a few | | | | kinds of software that indicate the swings in the |
| factors:o Knowledge of the Money Market | | | | market and an important tool for day traders.o |
| It is very important to have a good knowledge of | | | | Discipline |
| the stock market in order to be successful with | | | | The price of a volatile stock can fluctuate quickly. |
| short-term day trading. Individuals who attempt trade | | | | Therefore, it is important to be disciplined and stick |
| without a good understanding of the basics can lose | | | | to the trading plan for a day trader. Hence, it makes |
| huge amounts.o Good Amount of Capital to Invest | | | | no sense to trade for the sake of trading. If there is |
| It is important to day trade with good amount of | | | | no good trading opportunity, it is prudent for an |
| capital as it involves capital risk. A large amount of | | | | investor to stay out of the market.o Keeping |
| capital helps to capitalize on intra-day price | | | | Emotions in Check |
| movements.o Good Strategy to Win | | | | Last, it is important for a day trader not be ruled by |
| A day trader needs to employ a good strategy in | | | | emotions during trading. |
| order to be successful. It can be a high-risk, high-gain | | | | If all these can be kept in mind, a day trader can |
| strategy like swing trading or medium-risk, high-gain | | | | meet with success against the criticisms. |
| strategy like investing at the time of mergers. | | | | |