A DAY TRADER ?
STRATEGIES , CHARACTERISTICS AND RISKS INVOLVED
Trading for some is a means of livelihood , for some a side hustle.
It’s something experts will say require a high degree of discipline and consistency to master.
And as It’s a journey not a destination, you require mastery and consistency to survive in the game.
We’ll hear people say they’re either a DAY trader or a SWING trader . As these trading methods are all nice depending on the one tht works for you, it’s only paramount , we at SeriesX enable you understand more on what these trading styles are and will help you know through the strategies applicable to each , the one which works more for you.
DAY TRADING
What is DAY trading and who is a DAY trader?
As the name implies, DAY trading simply involves a trader who techniques and strategies for trading he executes yields him result within the same trading day.
In essence, DAY trading involves starting and closing trades which capitalizing on the intra day market movement.
Strategies DAY traders use include;
- Scalping: This strategy attempts to make numerous profits on lower TFs and small changes in prices throughout the same day.
- Range trading: This simply involves using primarily support and resistance zones that happens during an accumulation or distribution to make profits.
- News trading: This strategy simply involves seeing tradijg strategies based on FA backups which is basically gulping volatility dependent on some particular news events
- High Frequency trading(HTF): These strategies uses sophisticated algorithms to exploit small or short term market inefficiencies.
CHARACTERISTICS OF A DAY TRADER
A DAY trader should basically be one who trade for a living, rather than as a hobby as most of them are typically established in the field and have in-depth understanding of their respective financial markets as they’ve been there consistently and everyday.
What are some of their major Characteristics;
- Knowledge and Experience in the Markets: People who say they’re DAY traders but they don’t understand markets fundamentals, I’ll classify as gamblers. Technical Analysis and understanding of the charts are both good skills for a day trader to have . It’s important you do your due diligence and understand the particular ins and outs of any markets you’re trading , before you can be a profitable day trader.
- Sufficient Capital: As a DAY trader, you’re expected to expose only a very minimal part of your portfolio to risks , because they trade majorly lower TFs and there’s usually lots of noise in those patterns, so try as much as possible to always go into any market with a very good Stop loss and be sure before placing any trade .
- Patience: When a trader is entering or exiting the market at inopportune times, they will often say, “My timing is off.” One could also say, “My patience is off.” Jumping into, or out of, trades too early or too late is a rampant problem among new traders.They simply haven’t developed their patience enough to wait for the great entry and exit. This trait goes hand-in-hand with discipline, and you need to be patient until there is a call to action. Then, you need to have enough discipline to act without hesitation.
- Strategy: As these traders are present in the markets almost everyday , they’ve noticed some patterns and some days respective events happen . Eg , a good friend of mine will tell you that you can start seeing short positions in the cryptocurrency markets over the weekend , as this can be true ; most times is not always true . So as a DAY trader , it’s paramount you know what drives you to a particular market and patterns you look for when you go to trade your market as you tend to sustain losses when you tend to squeeze things out of a lone market.
RISKS OF DAY TRADING
As Contemporary individuals, because it’s called day trading and we like to close a day having a particular amount as gains , we tend to forget that we can also sustain losses if we fail to employ the best methods with regards to how things feasibly work daily .
So, what are some of the major risks DAY traders face;
- Be prepared to survive severe financial losses: Most times day traders survive a lot of financial losses in their first month as a trader , they don’t graduate to making profits , so it’s very important they learn well before they can assume that title of a day trader.
- Easy Profits is a fallacy: Most people choose day trading because they’ve always heards sayings like , “at the end of the day, you’ll always go home with something ” and that’s a lie. You should also understand that not all trades will go in your favor, especially as a starter but being a profitable day trader demands you show up everyday because there’s always a lesson to learn .
- Day trading is a full-time expensive job: DAY trading is extremely hard , because showing up everyday to watch prices do their thing is something not all can do and also you’re expected to be able view the market from a technical standpoint to be able to understand what happens there daily. Also not to be neglected are fundamental stories that might affect the market, so you’re expected to look deep into every market, by understanding your chart patterns and Technical Analysis, also you have to be notified about the happenings of your market so you can succeed in the market
Conclusion
Although day trading has become somewhat controversial, it can be viable way to earn a profit. Day traders, both institutional and individual, play an important role in the market by keeping the markets efficient and liquid . Though day trading remains popular among inexperienced traders, it should be left primarily to those with the skills and resources needed to succeed.
Would you love to be a DAY trader ?
Drop what you think in the comments here …
