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What is Day Trading?

Day trading is simply buying and selling stocks on the same trading day. Trading positions are usually closed before the market closes for the trading day.

Day trading is different from after-hours trading in that it is confined to the open hours of the stock exchange; trading that continues after regular hours is after-hours trading.

Buyers and sellers during a single trading day are called day traders. IF there is a lot of buying and selling done on a single day, they you might be imagining it to be a truly hectic day. In actual practice, this may not be so. You can make several trades a day or you may just make a single trade.

IF you buy a stock today and you this it is not profitable to sell it in the same day, then you can sell it on the next day. There are no legal restrictions to finish off your trading activity the same day. There is a small brokerage fee that you need to pay if you take your trade to the next day.

When the trading day is ending, most traders close their trading positions. Your trading strategy for the day determines you trading frequency; it may also depend on your general trading style and outlook.

Short term trading is done by some traders. It only takes them a few minutes of seconds to finish off their trades. These traders buy and sell several times a day and their trades consist of high volumes. They are the favorites of brokers who reward them with big discounts on commissions.

There are those who don’t mind these reduced brokerages. What they focus on is momentum or trends of stock movement so they don’t do fast trading. Sometimes there are really strong trades during the day and this is what these types of traders look for. During the trading day, they only make a few trades.

There are traders who make sure that their stock are sole at the close of the market day since they want to avoid the risk the comes from the price gap between the closing price on the day they bought the stock and its opening price the next day. This is the golden rule of some traders and they follow this religiously.

There are those who stay with the position even after the market closes so that their profits will run.

In day trading, the profits and losses come quickly. There is a big difference between day trading and gambling that some people fail to see. Day trading involves serious understanding of the process of trading while gambling does not allow you to make calculated moves or intelligent strategies.

If you want to learn more about day trading, click here for more info and tips.

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