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What is a Day Trader?
Day traders focus on short term trading. Such traders buy and sell within the same day. The main aim is generally to avoid interbank market financing costs. Such costs are associated with maintaining operations for more than a day, and hence day traders do not have to incur them.
Another benefit of day trading is that nightly premiums are also avoided. Many brokers impose these premiums in return for keeping their positions open till the market reopens on the following day.
Day traders generally close their positions before the market closes. The main aim is to avoid having to face unpredictable changes in the price which could have them incur losses.
Many opt for day trading as they prefer to set daily goals and manage to meet them. This also offers quicker returns and a sense of accomplishment.
Having said that, it is important to point out that such traders face risks too. Since they generally focus on small number values, they are however able to sell more quickly should the reality differ from their predictions.
Most day traders utilise technical analysis as it enables them to understand the price movements quite well, and then take the most propitious moment to buy or sell.
Fundamental analysis is also used by some day traders, so as to complement and reinforce technical analysis.
There are two main categories of day trading:
- The Scalpers such traders operate on a very short term basis, generally consisting of only minutes, and sometimes even seconds. Automatic investments and high frequency trading systems are used for this trading style.
- The Swing Traders such traders buy and sell over a relatively longer period of time when compared to scalpers. Usually the timeframe is of around an hour. At times it can also range into a number of days too.
Another benefit of day trading is that nightly premiums are also avoided. Many brokers impose these premiums in return for keeping their positions open till the market reopens on the following day.
Day traders generally close their positions before the market closes. The main aim is to avoid having to face unpredictable changes in the price which could have them incur losses.
Many opt for day trading as they prefer to set daily goals and manage to meet them. This also offers quicker returns and a sense of accomplishment.
Having said that, it is important to point out that such traders face risks too. Since they generally focus on small number values, they are however able to sell more quickly should the reality differ from their predictions.
Most day traders utilise technical analysis as it enables them to understand the price movements quite well, and then take the most propitious moment to buy or sell.
Fundamental analysis is also used by some day traders, so as to complement and reinforce technical analysis.
There are two main categories of day trading:
- The Scalpers such traders operate on a very short term basis, generally consisting of only minutes, and sometimes even seconds. Automatic investments and high frequency trading systems are used for this trading style.
- The Swing Traders such traders buy and sell over a relatively longer period of time when compared to scalpers. Usually the timeframe is of around an hour. At times it can also range into a number of days too.