How to Day Trade With Intraday
Day trading, also known as intraday trading, refers to a trading style based on rapid buying and selling of securities throughout the day, hoping that they will fall or rise in value as you expect them to. Typical intraday traders hold securities for hours, minutes, seconds or even milliseconds (traders often use computer systems to execute trades for them, which can make trading easier and much faster). However, day trading involves a significant degree of risk, as prices of financial instruments can change very rapidly and unexpectedly.
Other People Are Reading
Instructions
-
-
1
Learn as much as you can about intraday trading. What factors make different financial instruments rise and fall and in what way? How do you predict financial instruments' price movements? You can find answers for these question in books written by star day traders with recent first-hand experience in intraday trading. You can purchase such books on the Internet or at a local bookstore. You can also borrow them from your library.
-
2
Choose the instruments that you feel most comfortable with. A wide range of instruments can be traded on a short-term basis, including stocks and stock indices, foreign exchange, exchange-traded-funds (ETFs), and commodity futures. Research those that you think you would be able to trade profitably. Find and read books that deal particularly with those instruments.
-
-
3
Construct your trading system. Use financial instruments that you would like to specialize in and produce trading guidelines that you will follow in order to make your trading decisions. Make your trading guidelines as formal as possible. This will help speed up your real-time decision-making process when you open a live account.
-
4
Test your system against historical data and on a demo account. After you have your trading system ready, see how it would have performed if you had used it in the past. To get historical data on financial instruments' price movements, you need to find a broker that you will be dealing with in the future. Your broker will be happy to provide you with any historical data you need.
You can find a broker at MSN Money or in other broker review articles. Make sure your broker trades the instruments you are interested in. Nearly all brokers allow you to open a demo account--an account that looks just like the real one but where money is not real. You can use it to test your trading system and get acquainted with the broker's trading platform.
-
5
Open a live account and start trading as close to your trading system as possible. If your system tests well, open a live account and deposit funds you will trade with. You can deposit money into your trading account via a bank wire transfer. You broker will tell you exactly how to do it.
-
6
Start trading. Do not take too much risk and trade as closely as you can to the trading system you designed and tested. If your trading is unprofitable, stop and revise your system before continuing trading and losing even more money.
-
1
References
Resources
- Photo Credit stocks and shares image by Andrew Brown from Fotolia.com
