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.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Access to research tools: charts, financial websites or other financial news publications

Elements of Great Intraday Play

1. 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.

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.

3. 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.

4. 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.

5. 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.

References

• SEC warning about day trading
• How to Day Trade