Online Day Trading Strategies

Day trading is a relatively new phenomenon. The idea of accumulating and selling investments in a rapid-fire manner was virtually unthinkable only a few short years ago. Today’s technology, however, enables individuals to purchase and sell investments in record time. It’s possible to buy a position at price X and sell it for a profit at price Y in a matter of minutes.

Day trading, obviously, requires an ability to act quickly and to observe micro-trends within the market. Day trading isn’t about picking long-term winners or stocks that have an eventual upside. The essence of day trading is taking advantage of brief price fluctuations. A day trader makes his or her money by finding and exploiting small windows of opportunities.

Some day traders practice what is referred to as trend following. They look for trends, even brief ones, and make their decisions accordingly. Others consider themselves range traders. They note investments that tend to bob up and down within a certain range and try to gain maximum profit by buying and selling on the two ends of that spectrum.

Day traders often become news junkies. They keep their eyes open for news and announcements that might have an immediate impact on investment values. They use that information and their own analysis to predict brief market gains and losses and position themselves accordingly.

Spread trading is another day trading strategy. It’s sometimes referred to as “scalping” and involves finding what appear to be “can’t lose” positions via arbitrage within the bid-ask spread. This type of trading often occurs at incredibly fast rates. Positions may be established and sold within a matter of seconds.

Not all day traders work based on the assumption that they are parking money temporarily in a gaining position. Most purchases are made with gains in mind, but some day traders also engage in selling stocks short. Selling short is a time-tested market strategy that can be effectively adopted for use in the fast-paced world of day trading.

As you can see, there is no shortage of ways to earn money as a day trader. There are a handful of basic strategies and each of these can be permuted in a variety of ways. Day trading requires close attention and good money management, but can be incredibly lucrative if done correctly. It’s an exciting, enticing, and potentially profitable way of entering the markets.