Do you want to start day trading online? Are you finding it difficult? We’ll try to make the ride as comfortable as possible. This post is for all the beginners who want to start in day trading. In this post, we will help you understand the basics of day trading. You don’t have to rely on YouTube tutorials, because we are here to help you. The markets have a lot to offer, so let’s make the most of it. In this post, we will show you how to start online day trading in 2021. So let’s start with the basics first.
What is day trading?
The meaning is hidden in the question itself. As we all know, trading means buying and selling securities. So when trading is done in a single day, it is called day trading. In day trading you have to buy and sell securities in a single trading day. You have to end your trading for the day before the market closes. However, you can trade as many times as possible in a single day. You can buy high-liquidity stocks, and when the price fluctuates for the day, you have to make your move and sell the stock against a higher or lower price but this depends on what kind off trade you’re doing (long/short). Moreover, you can get high returns from small price fluctuations of stocks because you’re trading with leverage. The downfall of this is that because of the leverage you’re loss can also be higher.
Who is a day trader?
A day trader is a person who indulges in day trading. You don’t have to possess any qualification or experience to become a day trader. Anybody can choose to become a day trader. As day traders trade daily, they are also known as “active traders”. And the traders who open and close multiple trades in a day are known as “hyper-active traders”. For this, you need to know the latest trends in the market. You need to be updated about the news and events that might affect the market.
Who is a broker?
You cannot trade in securities directly. You need to approach a broker. A broker is like a middle man. These brokers are responsible for executing the trade. They will buy and sell the securities on your behalf in the market. In return, you have to pay them a commission. As you know, a broker acts on your behalf, and you have to be really careful while choosing one. There are many individual brokers as well as large brokerage firms who provide their services to traders.
Mr Z is a day trader. He wants to purchase three shares of Company C for $100. He will approach broker Mr X to purchase the shares. Now when the price fluctuates, Mr Z will sell the three shares of Company C on the same day. He will approach broker Mr X to sell the three shares for $120. Mr Z will have to pay a $ 5 commission to broker Mr X. By the end of the day Mr Z will make $15 profit.
How to choose a broker?
A broker plays a very crucial role in trading, so you have to be really careful while selecting a broker. There are many brokerage firms in the market. Make sure you consider the following points while choosing a broker.
A broker is responsible for executing the trade on your behalf. So if you have to trade multiple times, you need someone who will execute the trade quickly. Markets fluctuate within seconds. So make sure you choose a broker who will execute the trade in minimum time.
You have to pay commission or fees to the brokers in return. It is known as brokerage. Less brokerage means more profit saving. So choose a broker that charges fewer fees. Once you start trading frequently, they will lower the fees.
You need to choose a broker who is legally allowed to trade. Many fraud brokers don’t have a license. These people will put you into trouble.
Brokers not only help you in trading, but they also provide assistance and advice as well. So choose a broker who is good with customers.
Spread means the price difference. You need to choose a broker with high spreads.
These are all the points you need to check before you appoint a broker. There are many options available online. You can review these brokers online.
Day Trading Options
Now that we are clear with all the basic terms like day trading, trader, broker, broker selection, it is time to focus on trading options. Here we will see the most popular day trading markets, for you to trade-in.
The Forex market is also known as Foreign Exchange Currency Market. One of the major advantages of day trading in a Forex market is “liquidity”. It is a very big market and a popular market. You can easily trade in trending currency pairs. And as the price changes, you can sell them. This market is open for six days in a week and functions 24/7. You don’t have any time restrictions like the stock market. You can easily trade in dollars and other currencies here.
It is one of the most prominent markets. In this market stocks of various companies are traded. As we know companies issue shares and list them on the stock market for people to invest. It can be useful for day traders. You can purchase stocks of companies depending upon news like, expansion of the company, new launch, etc. and when the right time comes, you can sell the stocks for profit. This market works on speculation, so it is a good choice for day trading.
This trading market is trending worldwide. This market is decentralized, so there is no middle man. You can easily trade in popular cryptocurrencies like Bitcoin and Ethereum. This market has huge potential. And now that most of the companies are using blockchain technology, cryptocurrencies will rise in the trading world.
In binary options, the traders are aware of the returns and timing. This market is very predictable. This market is not regulated. Big brands are starting to enter this market. It is a good opportunity for day traders.
This market deals in the future price of commodities.
Commodities market includes trading in commodities like oil and natural gas, metals, minerals and food items.
These are all the trading options available for you. Now you must not hurry, first understand how each market works. Learn the patterns, study the trends, find the loopholes, and choose which market is more beneficial for you. You can choose to trade in multiple markets as well. While the stock market is crashing, the cryptocurrency market is rising, so make sure you choose wisely.
How to get started with day trading in 2021?
Now that you know about the market options, you can choose the market you want to trade-in. The next step is to start day trading. A number of individuals are turning towards day trading business. You can practice it full time or on a part-time basis. So while getting started, you might need some assistance. Good for you, there are many options for you. You take day trading courses, download trading apps, and learn online. Here are two options for you.
Understanding Day trading Chart patterns:
Now you need to understand chart patterns in day trading to make your decision. By learning the chart patterns, you have a clear picture of the situations in the trading market. You can easily predict future price and speculate price changes. There are two common day trading chart patterns.
- Reversals: Reversals chart indicates that the trend will reverse in the day trading market.
- Continuations: This chart indicates that the trend will continue rising.
Day Trading Strategies:
After understanding the trends, you must use a strategy to gain an advantage. Before you start trading, you must employ a good strategy so that you don’t lose your money. There are many strategies and techniques for day trading. You can adopt any of these strategies as per your convenience and choice.
- Swing Trading
- Trading zones
- Trading on volume
- Arbitrage trading
- Utilizing news
These are the major things you must consider before you start day trading. Follow the right strategies, choose the correct technique, understand the charts, use day trading platforms, choose the right market, and appoint a good broker. By following these basic steps, you can start your day trading business.