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Day Trading

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Trading Education

Day Trading

The term “daytrading” is used to describe the process of buying and selling of securities during market hours.  A day trader by definition is someone who closes out all of their trades or positions prior to the close of the market. A day trader must close all of their positions or go “flat” at the end of the trading day regardless of whether or not they were profitable.

The idea behind daytrading is to capture as much money as possible during intraday price movement.  All daytrading activity is limited to open market hours.  A daytrader must always finish and get out of the market prior to the close.  This allows the daytrader to avoid the risk of holding any securities overnight.  Many unforeseen things could happen overnight that would impact the direction of price movement prior to the following day, to avoid this risk exposure daytraders always close all of their positions prior to the close.

Security prices rarely move in a straight linear direction, prices are always fluctuating and the daytrader may in fact watch their buy order lose before it becomes profitable.  As a result of the volatility in the market and constant price fluctuations, daytrading is an extremely risky and a very stressful trading style. Unfortunately, many new traders and beginners enter the market as daytraders without the education, knowledge or experience that is essential to survive as a daytrader.  Consequently, the failure rate among new daytraders is staggering.

First of all, daytrading will not work in just any market; daytraders must carefully study and select the instrument that they wish to trade. The instrument must be very liquid to allow for easy entry and exit of positions. The daytrader must become intimately familiar with the price behavior patterns of the instrument that they will choose to daytrade.

Conceptually, the idea of daytrading is easy and simple to understand.  However, in practice it is extremely difficult to execute with consistent profitability.  Daytrading requires a fundamental education of how the markets work, an understanding of technical analysis tools plus many hours of simulated trading practice.  The learning curve is steep for new traders and requires lots of hard work.  Daytrading is not a get rich quick scheme, for the uneducated novice it is actually a get poor quick scheme. 

Learning to daytrade using a trial and error approach is an extremely dangerous and costly proposition.  It has cost many traders their entire trading capital.  The market is riddled with the ashes of traders who have crashed and burned. It is important for daytraders to understand that there is no secret trick, gimmick or methods for success.  The same exact ingredients that lead to success in life apply to the practice of daytrading.  Success in any profession in life requires education, commitment, patience, practice, planning and lots of hard work. Daytrading is just like any other profession or occupation, to excel you must learn the craft, practice it and then apply it. 

At strategic trading we teach the essential knowledge required for success and we work with our students to coach and guide them on the path of success.  Daytrading is a journey that begins with the right education. Once mastered, daytrading can be a life changing experience.