Intraday trading aka Day Trading
Intraday trading is becoming increasingly popular among individual and institutional investors. This can be attributed to the incredible benefits that this method of trading stocks offers.
This article helps you understand what intraday trading is, what you need to trade successfully, its advantages and disadvantages. Continue reading.
What Is Intraday Trading?
Intraday trading is the act of buying and selling of securities in a single day (also known as day trading) based on trade ideas (Read our Trade Ideas Review for more information).
While this mainly occurs in foreign exchange and stock markets, it can also occur in other markets. Essentially, day traders are well funded and have solid education about trading stocks and forex.
They make proper use of short-term trading strategies, which help them capitalize on small price movements, especially in stocks that are considered liquid. Nonetheless, day traders enjoy a high amount of advantage and enjoy keeping the market in an efficient running mode through arbitrage.
In the stock markets, these traders are known to offer the highest levels of liquidity.
What You Need To Succeed In Intraday Trading
- To do intraday trading, you need to have access to complex instruments and financial services that are available in the marketplace today. Here are some of the things that day traders require to achieve their goals.
- Access to a trading desk that helps the traders execute transactions instantaneously.
- Multiple news sources that provide information about the opportunities which day traders can capitalize on.
- Feature rich analytical software that offers features that include automatic pattern recognition, neural and genetic applications, broker integration and back testing among others. These tools provide the trader with a competitive edge over other traders that compete for profits in the same market.
Benefits of Intraday Trading
Every day, the numbers of people who are getting attracted to intraday trading continue to increase, thanks to the many benefits that it offers. Here are dew incredible benefits that day trading offer.
1. Elimination of overnight risk
It is possible for the market to fluctuate at a rate between five and ten percent every night. A stock that is making a higher high and higher low opens the next day at such low level, therefore wiping out several days of profit. With intraday trading, this can be eliminated as disastrous news and market adjustments will not affect you.
2. Leveraging capital investment
Most of the available brokers provide their clients with a margin that is several times their capital. This offers them an opportunity to control more investments than whatever is actually available in the market. This means that with just a small investment, a trader can earn a decent income from day trading, unlike what it is the case with other business ventures.
3. It offers a unique learning opportunity
Day traders can have an opportunity to learn, try to test a wide range of trading techniques and patterns within a short time frame. This means that the efficiency of the trader can be increased drastically within a short period. As a subscriber to Trade Ideas Pro you will take a short cut learning even faster. In case you want to give it a try, use this Trade Ideas promo code today.
4. You can trade from anywhere
Day trading can be done from anywhere and there is no need for a unique infrastructure. You do not need an office, workers, furniture and many more. Any interested person can run this kind of business.
Disadvantages of intraday trading
1. It requires proper timing (split second timing)
This method of trading stocks works better for those who can make decisions within a split of a second. To succeed, you should be able to analyze the market faster and execute your trade confidently and with speed. You should be able to place your trades, manage your risks and the corresponding rewards.
2. It is more emotional
You will find intraday trading to be more emotional when compared to other stock trading methods. Whenever your profit and loss statements move up and down pretty fast, it can be nerve wracking.
3. It can be boring
In scenarios where the market is moving quite fast, you will face the challenge of making split second decisions as well as managing the emotions of greed and fear. This may make you sit helplessly, watching the market move in random without offering you a high probability trading opportunity.
The prevalence of day trading in the stock market is quite evident today. Both institutional and individual intraday traders are helping keep the market liquid and efficient.
However, just like anything else, this method of trading stocks offers a myriad of advantages and disadvantages. Artificial Intelligence can help you to make your intraday trading more efficient. Please read our Trade Ideas Review for more information.