Ricky Lim runs a day trading guide site. Visit his site today for more info on how day trading works.
Many people often get confused by the financial terms such as currency, forex exchange, trading etc. It's a big complex financial world and one of the new trading concepts is day trading.
Day trading in its simplest term means buying and selling securities, stock and other financial investment within a single trading day. It covers a wide variety of financial products such as stocks, currencies, forex, equity index, futures and commodities.
The financial products that are brought are only held with a trading day and must be sold at the end of a trading day
Due to the short time period in which to buy and sell stocks, day trading is considered risky. If you are interested in day trading, be prepared to have sufficient capital. You need to purchase at least 1000 shares of a stock. Be prepared for this capital to be expendable.
Although day trading is risky, it does have big rewards if you know how to play in this game. Many day traders never allow themselves to get emotional with any one stock. They should know when to cut their losses when the need arises as well as able to analyze the current market trend particularly in the short term.
One advantage of day trading is that the intraday margin is 50 to 1. That's means you are allowed to trade up to 50 times your initial capital.
So what if you do not have the necessary capital to invest in day trading. Thankfully, you could try day trading currencies. Trading currencies requires less capital. You only need a couple of hundred dollars to be able to open a forex mini account.
One major disadvantage of day trading is the stock market is only open for about 8 hours each day. However for currency trading, the forex market is open 24/7. That means you can trade just about any time of the day.
Another advantage of day trading currencies is that most day traders get an intraday margin of 4. That means with the same capital, you can trade up to 4 times your capital. For example, if you have $10,000 as capital, you can trade up to $40,000. This gives you more leverage if you decide to buy higher price currencies.
Day trading currrencies are also easier to monitor and predict compared to stocks as there are less of them and the factors influencing global forex market are lesser
In day trading, you can lose big as well as win big all in a single day so I would not recommend anyone to take up day trading until you have sufficient experience and knowledge in the stock or forex markets. Wise and quick decision making is needed as well as the usual stock research analysis, market analysis etc.
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