How to Make an Intraday Play
Day trading is a difficult task to undertake, but knowing what to look for can give you a huge advantage. Intraday trading is most often used with stocks and foreign currency and it does require a fair amount of start-up capital. To qualify as a day trader under the definition given by the Securities and Exchange Commission, you must have $25,000 in capital in your brokerage account and make at least four trades in five trading days that are opened and closed within a single trading day.
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Things You'll Need
- Access to research tools: charts, financial websites or other financial news publications
Instructions
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Elements of Great Intraday Play
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Research securities and find the ones that might be considered "in play" during a particular day. For stocks, this might mean finding a company that is about to report earnings. For foreign currency perhaps it means finding a currency whose home nation is announcing unemployment news or a related catalyst.
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2
Embrace volatility. Volatility can be a scary word to many investors, but day traders love it. Volatile securities are how day traders make their living. It literally doesn't pay to trade a stock or currency pair that has a penchant for trading in tight ranges all day.
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Look for high volume. Securities that have low volume also lack volatility, meaning it will be harder to make money in the intraday timeframe. In addition, low-volume securities can be difficult to sell and you cannot make money unless you can close your position.
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Consider using a market screener or scanner. Some trading services offer scanners for free. Some are available for a monthly fee. These tools can help you find the best intraday opportunities and some you may have missed during your premarket routine.
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Study charts. Stock and currency charts often have clues about potential breakouts or collapses. Make chart review a part of your daily routine if you're day trading.
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