Tag: day trading stocks

  • Day Trading Stocks – Most Profitable Type Of Trading

    Day Trading Stocks – Most Profitable Type Of Trading

    For day trading stocks you need volume, volatility, and a trend or range tendency. When using a stock screener, enter your rules into the relevant fields to narrow the surplus of stocks down to a few.

    Maybe it is too difficult to explicitly say that one type of trading stocks is more profitable than the others but Day trading stocks is the choice of active traders because of its profitability. Why did we say it is difficult to point to the special one? Because it depends on what kind of trader someone is and, maybe much more, on which strategy the trader chooses to use. Also, it isn’t the same which market you trade and what assets you are trading. 

    The individual traders can make a few trades per day since it isn’t hard to enter and exit several trades daily. Of course, big investors would prefer long-term opportunities. 

    One is sure, getting into day trading stocks is a decision that no one should make in a hurry. You should take time to examine all difficulties, to learn them since day trading stocks requires very careful planning. Only in that way, you’ll be able to earn your life-time capital in just a few hours. Yes, it is possible because day trading stock is one of the most profitable types of trading.

    Before we jump into the day trading stocks we have to explain what day trading is.

    What is Day trading stocks? 

    Day trading stocks means the trader is opening and closing the position during one trading day. When a trader opens a trade at 10 PM and closes it before 2 PM we are talking about day trading. You can find the traders who trade day only, some will perform it depending on the situation and opportunities, but also, so many traders never implement day trading stocks.

    How does a day trader pick the stock?

    Of course, a day trader is very careful and never just picks a stock no matter which one. Day traders always estimate the reasons to trade a particular stock. And as the reasons are different, traders have different criteria and strategies.

    Since there are thousands of stocks in the market to choose from, the main question is how to do that? What is the best criterion, measure, method? It differs too. And if we try to figure it out, we can get confused. Look, some traders can find a new stock every single day. They are seeking stocks that are breaking out of patterns. Some are looking for the most volatile stock or the stocks that breakout of support or resistance levels. Also, some traders have the favorite stock or two and trade them every day for months or years. This isn’t without a good reason behind. If you know the particular stock very well, you’ll need less research on it. Since you already have the chosen one, you don’t need to search further for new stocks and breakouts or volatility. 

    How to find a stock for day trading?

    If you want to become a day trader, you have to pay attention to several things.

    Volume

    For a day trader, a stock volume is important to enter and exit trades. To explain this more. When the volume of the stock is high it is much easier to enter and exit the position and to do without slippage or with very little. Why is it important to avoid slippage or to lessen it? Slippage happens almost all times but generally during periods of high volatility when traders use the market orders. 

    It happens when a trader gets a different price than expected, no matter if such a trader is on an entry or exit from a trade. Slippage occurs when the market order or your stop-loss point shifts somewhere between the time of your entry and the time of the execution. This is especially noticeable during periods of higher volatility when orders are bigger than the usual amount of shares on the bid or offer.

    While choices vary, but many day traders will trade stocks with a daily volume of several million, some have over 90 million. That is a big number and it is hard to manage that. So day traders usually narrow the number of stocks down by using a stock screener. If they still have too many stocks to observe, the traders commonly reduce it to stocks with a volume of 3 of 4 million on a daily average.

    Volatility

    Volatility is important too because day traders need stocks with strong change during the day. The stocks have different volatility. Some will move 0.5% daily but others will move 5% or more per day. Picking the stock may depend on many factors, for example, reflexes, a trading style, your temper, etc. For the majority of traders, the stocks that shift 0.5% to 2% daily are the best choice since they can handle that volatility. Volatility over 5% daily is hard to handle. Only the most experienced traders trade these stocks.

    Trend and range

    These two components are important in day trading stocks. Traders differ by what they are trading, so we have trend traders, range traders and some that use both excellently. As you know, the trend is the direction of stock’s price, while the range is the difference between low and high prices over a particular trading time. The stock price is moving all the time. It can go down or up showing a downtrend or uptrend. A stock screener is very helpful here and will separate stocks with trend or range depending on your setups for the strategy you chose.

    How to learn day trading stocks?

    There are many ideas and methods to maximize profits from day trading. Nevertheless, managing the risks connected to day trading is most important.

    First, trade only the amount you can afford to lose. You must have aside some amount of money for day trading. Don’t rent money for day trading because it’s possible to lose it. Start with a small amount and keep strong control over losses until you get some knowledge and experience. Don’t think you can quit your day job immediately. Day trading is seductive, we know that. But you need to test your strategy when the markets get rocky, for example, during the recession. If you are profitable, you can easily shift to day trading.

    When to buy?

    Day traders try to make money by using small price movements in assets. They have to leverage vast amounts of money to do so. They are focused on liquidity. That allows them to enter and exit a stock at a favorable price. Further, they keep an eye on volatility, higher volatility leads to greater profits or losses. Trading volume is another thing that they are considering. High volume means there are a lot of people interested in the particular stock. When the volume is increasing that is a sign that the price will drop or go up. After you choose a stock you want to trade you have to learn how to recognize the entry point. Some tools can help you. For example, some news services, but it has to be a real-time service because the stock prices can be influenced by news.

    Quotes are important too. Electronic communication networks, for example, display the best open bid and ask quotes from various market players and can automatically pair and execute orders. 

    Intraday candlestick charts are useful but provide a rough analysis of price action. 

    Your entry point has to be defined very accurately, you have to know the exact point when you are going to enter the position. For example “during the downtrend” isn’t precisely defined. You have to define more specifically and test it too and find if there is a chance for that to be generated each day or more often. 

    Also, the direction has to be tested. You would like the price to go in your expected direction. After you check and test everything you may have a potential entry for your strategy. 

    After finding an entry point you’ll need to judge how to exit, or sell, your trades.

    When to sell?

    There are many ways to exit a winning position. For example, trailing stop and profit target. The profit target is the most popular. The other well-known price target strategies are scalping, fading, daily pivots, momentum. The best time to exit is when the interest in the stock is decreasing. The volume will show that. Your profit target should provide you more profit on winning trade than you would have a loss in a bad trade. For example, if your stop-loss is 2% away from your entry price, your take profit level should be more than 2% away. You have to know your exit before you even enter the trade. The exit level has to be precise.

    Bottom line

    Day trading means to take advantage of small price changes. It can be a profitable game if you play it carefully. Hence it can be a risky game for new and inexperienced traders who don’t have a strong trading strategy. This type of trading is connected to the high volume of trades. So you have to respect some general principles if you want to become a day trader.

    You may have profitable trades by following the patterns. More about it learn from the “Two Fold Formula” book, we recommend. But we also recommend to test it by using our preferred trading platform firstly.

    You might find these interesting too:

     >>> Is Day Trading Like Gambling?

    >>> Swing Trading and Day Trading – The Difference

    >>> The pattern day trader rule

    >>> Day Trading the Best Methods – Day Trading for Beginners

    >>> Day trading stocks – How to find best trading platform

    >>> What is the best day trading strategy?

    >>> Money Required to Start the Day Trading

     

     

  • Swing Trading and Day Trading – Make A Difference

    Swing Trading and Day Trading – Make A Difference

    4 min read

    Swing Trading and Day Trading - Make A Difference
    Swing trading or day trading? Where is the difference?

    For some new trader, day trading and swing trading are like two different movie roles.

    Day traders open and close many positions in a frame of one day. On the other side, as a totally different character, is a swing trader. Such a trader takes trades that last many days or months.

    The different styles satisfy different types of traders. It depends on some factors such as the type of market, how much time they want to spend on trading, or what characteristics they have as traders.

    Normally, both methods have the same goal: to make a profit grown on price changes in the market.

    First of all, you should know all the features of your trading system. You have to feel comfortable when trade and you must profit from it.

    Never ever pick your trading system randomly. Or because it works for someone.

    Why is that?

    Because the trading system is like a pair of gloves. The only one will suits you the best.

    Your trading system must meet your temperament.

    It isn’t about that swing trading is better than the day trading. It is all about which method satisfies a trader’s individual goals.

    Some traders will adopt swing trading, but others will use day trading.

    Day trading is good for traders who want quick returns. For example, a day trader risks 1% of funds on each trade. If there are loses, the trader loses 1%.

    What does happen if a trader win?

    A trader will make 2%. Do you know why?

    Reward to risk ratio is 2:1.

    Let’s go deeper!

    Assume the day trader wins 50% of trades. And the trader makes, for example, 6 trades in one day. That will be in the final score 3% on the account balance. Yes, minus trading fees.

    Well, with making 1% per day the trader will increase trading account by more than 200% per year.

    Wait, nothing is so easy!

    On the other side of the medal is that you can very fast drain your trading account if you opt day trading.

    How?

    Let’s see!

    You must have winning trades twice more than lost trades. At the same time, you have to win 50% of all the trades you take.

    Tell now is it easy!

    Swing trading collects gains and losses increased gradually.

    The purpose of swing trading is to take larger price moves than it can be found as intraday price performance.  

    In other words, swing trading has based on the fact that the price does not run in a continuous course.  

    For you to have a clear picture.

    Have you ever see the waves on the ocean?

    That’s how the price moves in swings, depending on the short-term price trend and momentum.

    The essential concept of swing trading is to enter at or near one swing top and exit at or near the next.

    Just like riding the waves. Swing trading is a trading methodology that seeks to capture a swing.

    Just like a surfer trying to catch the wave. Swing trading, in essence, is to catch one move in the market.

    Swing Trading and Day Trading - Make A Difference 1
    In an average month, the swing trader could profit 3%, minus fees.

    For a one year, a swing trader may gain 36%, which sounds good. Some proponents of day trading will tell but offer less potential than a day trader’s possible earnings.

    But swing trading fans will tell that has a much larger profit potential than day trading.

    On their benefit, the time frame for trading is larger so the profit targets are also greater.

    The truth is if you modify the numbers of trades won, the wins compared to losses will have an influence on earning potential.

    Sound logical indeed!

    The universal rule, day trading has more profit potential. Especially if you trade with a small account.

    Well, everyone would like to trade with a large account.

    But there is the catch with day trading.

    When the volume of the account increases it is harder to employ all the resources on short-term day trading.

    Or think about this!

    For example, the percentage of returns decline the more capital the day trader has.

    The money returns are increasing, of course! But 3% of returns on $2 million account is still more than 50% on $100,000.

    The capital demands

    Day trading and swing traders can begin with different sums. It depends on which market they want to trade. There are some differences if they trade the stock, forex or futures market.

    If you want to day trade stocks in the US it is recommended to start with $25,000.

    Swing Trading and Day Trading - Make A Difference 2
    A swing trader will start with $10,000 and rather with $20,000 if want to pick a profit from trading.

    A lot of money indeed.

    But if you want to start day trading on the forex there is no minimum needed for that.

    Well, it is advised that traders should start at $500. To swing trade forex, the minimum recommended is about $1,500. But you would like to start with more. You will need the capital that allows you to enter a few trades at one time.

    To trade futures as a day trader, you will need about $6,000 more or less.

    For example, trading micro contracts may require less.

    For swing trader to trade a futures contracts, it is recommended at least $10,000. Even more! About $20,000 or more is better.

    This amount depends on the margin demands of the contract you want to trade.

    Time frames differences

    Frankly, day trading takes up much more time. Day traders ordinarily trade for at insignificant two hours per day.

    Are you sure you have 2 hours every day to dedicate to trading?

    There is preparation time, too. That means spending three to four hours at the computer.

    Swing trading will demand a much shorter time. For instance, a trader is swing trading off a daily chart. Such a trader may find new trades and update orders on current positions in less than one hour.

    Even less!

    Some swing traders will finish all about trade once a week. That means a one-hour per week, and moreover, not over the night.

    They can go to sleep earlier! Or do whatever they want! Go to the cinema! Or have a romantic dinner!

    If you prefer to be an unfortunate day trader, you must do day trading while a market is open and hot.

    On the other side are swing traders. They can place orders at any time of day. Even when the market is closed.

    They are such lucky guys!

    The bottom line

    We cannot say the one trading style is better. They are just different. Both can be suitable for different needs.

    Day trading has more profit possibilities.

    Swing trading has a bigger chance of percentage returns.

    There is one big difference.

    Money demands to start trading are considerably different.  

    Day trading requires more time than swing trading.

    But swing trading demands less stress.

    Anyway, your decision will be the last one. But remember, you have to find the one which will suites you the best.

    For your profit.

    Don’t waste your money!

     risk disclosure

  • Day trading stocks – How to find best trading platform

    Day trading stocks – How to find best trading platform

    4 min read

    Day trading stocks - How to find best trading platform
    Day trading stocks are powerful and exciting. Moreover, they are easy to buy and sell. With the progress of technology, the market is easily available. Speculating on prices going up or down in the short term is absolutely visible.

    Also, stocks are simple to understand and follow.

    Attempt to identify which stocks to trade intraday won’t be as challenging as it is in other markets. But if you want excitement, you can choose to trade in the complex technical world of cryptocurrencies or forex. Even if it burns your mind. Of course, you can manage with the triumphs and potential traps of Google and Facebook far easier.

    Day trading vs stock investing

    Before you start day trading stocks, you should analyze whether it surely suits your conditions.

    For example, intraday trading regularly expects a couple of hours each day. One of these hours has to be early in the morning. You have to be there when the market opens.

    Longer term stock investing, however, normally takes less time. It gives you more flexibility as to when you do your research and analysis.

    Further, intraday trading returns can beat those of long-term investing. This is the influence of leverage. This allows you to borrow money to capitalize on chances, to trade on margin, in other words. However, with grown profit potential also comes a greater risk of losses. Do you know that? Moreover, you will also invest more time into day trading for those returns.

    Somebody would say day trading is harder because you focus on day trading one stock only. This is because interpreting the stock ticker and spotting gaps over the long term are far easier. You also don’t have to hurry to make judgments when investing. Hence, this also means intraday trading can provide a more exciting and stimulating environment.

    Day trading stocks - How to find best trading platform 1

    Day trading stocks platform

    The major advantage of CFDs and spread betting over traditional assets investment is the ability to “go short“. It isn’t easy to make money in a collapsing market using traditional approaches. Day traders, however, can trade regardless of whether they think the value will rise or fall.

    Frankly, there is no precise answer in terms of day trading vs long-term stocks. Spotting trends and growth stocks in some ways may be more simple when long-term investing. On the other hand, intraday trading may yield you higher returns.

    How to day trading stocks

    The best day trading stocks can give you opportunities through price movements and opulence of shares being traded. This will provide you to enter and exit those opportunities quickly. We recognize these circumstances as volatility and volume. So, let’s break down these terms:

    Volume

    Volume is the total number of shares traded in a security or market during a specific period. Each transaction adds to the total volume. If, for example, in one day is made 32 transactions, the volume for that given day is 32.

    How a day trader can use this in order to make his stock picks?

    Volume is an indicator giving weight to a market move. If there is an unexpected spike, the strength of that movement is dependant on the volume during that time period.

    In simple words, the greater the volume, the more significant the move.

    How to use volume?

    If you have a solid capital, you need stocks with notable volume. Well, your brokerage account will possibly provide you with a list of the top 20-25 stocks. But you would like to expand your search a little wider.

    That way you can find opportunities that are below other trader’s radar. You have to find stocks with a spike in volume.

    For example, a stock mostly trades 2.5 million shares per day. But you notice that it usually trades 4 million shares by 9 AM.

    What does it mean? It means that you have made a good examination and you have a better opportunity.

    Hence, you have to choose the platform with the diligent screener for high volume stocks.

    Volatility

    Volatility refers to the amount of risk/unpredictability in the size of changes in a security’s value. If there is high volatility the value could be spread over a large range of values. This means the price of the security could change dramatically in a short frame of time. It is perfect for the fast-moving day trader.

    On the opposite situation, if it has low volatility, the security’s value will remain almost steady. But it will offer less opportunity for a quick profit.

    How to use volatility

    One way is to use the beta. The beta predicts the total volatility of a security’s returns against the returns of a relevant benchmark (normally the S&P 500).

    Day trading stocks - How to find best trading platform 2

    Day trading stocks

    A stock with a beta value of 1.4 has moved approximately 140% for every 100% in the benchmark.

    So, a stock with a beta of just .6 has moved 60% for every 100% in the comparative index.

    The way you use these parts will affect your possible profit and will depend on your strategies for day trading stocks.

    Day trading platform

    This is the general name for any software that helps you analyze, and make a trade. It may grant you access to all the technical analysis and indicator tools and resources you need. The best day trading platform may also identify trades and even automate or execute them in line with your strategy. No matter you’re after trading platform for beginners, or as an advanced trader. With more options than ever before, doing your research is more important than ever.

    Firstly, you’ll find out exactly how these platforms work. Also, you will touch upon the platform’s demo accounts, equipment, and regional differences.

    It may be difficult when you select a broker for day trading. As a trader, you want to pay several dollars per trade. That’s because you want low-cost trades. But a  platform with great tools is important to you too. Therefore, you have to pay more and you are agreed with that.

    Some day traders will tell you the platform design isn’t important so much. Day trading as a profession is risky business. So, it is very important to find the best trading platform.

    So, we feel free to recommend 2 of plenty we tested for day trading stocks.

    • Fidelity

    Fidelity Investments 1
    It is a full-service broker with over 19 million retail brokerage accounts and over $2 trillion in client assets.

    Fidelity charges $4.95 per stock trade, $4.95 plus $.65 per contract for options trades, and is highly regarded for its quality customer service, extensive retirement services, and all-around investment offering.

    The company’s tradition of putting clients’ interests “before our own is a big part of what makes Fidelity special,” the fund firm says in its mission statement.

    Streaming quotes are included as well as 48 total columns of data to choose from. Furthermore, the workflow is seamless, making it a breeze to transition into equity research or into the docked order ticket to place a trade.
    More about Fidelity you can read on our Wall of Fame.

    • TD AMERITRADE

    TD Ameritrade 1
    The company offers an electronic trading platform for the purchase and sale of financial securities. Such as stocks,  futures contracts, exchange-traded funds, options, mutual funds, and fixed income investments.

    It also provides margin lending, and cash management services.

    Ameritrade develops and provides innovative brokerage products and services. They are tailored to meet the varying investing and portfolio management needs of individual investors and institutional distribution partners.

    Through its brokerage subsidiaries, it provides a dynamic balance of investment products and services that fit the changing needs of investors. The company’s full spectrum of services for the individual investor includes a leading active trader program.

    Such as long-term investor solutions, including a national branch system. As well as relationships with one of the largest networks of independent registered investment advisors.

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