Every week, we bring you bite-sized insights into popular assets and trending questions, helping you navigate the investment market easily.
In this Markets in Focus, we take a closer look at Day Trading.
What Is Day Trading?
Day trading, or intraday trading, refers to the practice of buying and selling financial instruments within the same trading day. A typical day trader opens positions when the market opens and closes them before it closes, aiming to capitalize on small price movements throughout the day.
Day traders can speculate on a wide variety of assets, including stocks, forex, indices, cryptocurrencies, and commodities.
Key Benefits & Risks
Day trading offers the potential for quick profits, but it’s also highly risky. Prices can swing rapidly during the day. To succeed, traders need to do in-depth research and never risk more than they can afford to lose.
Unlike long-term investing, which is focused on gradual value appreciation over months or years, day trading depends on short-term market fluctuations.
How Day Trading Works
- Volatility: Day traders look for assets with significant intraday price movements.
- Liquidity: It’s important that an asset can be bought and sold quickly without large price changes.
- CFDs (Contracts for Difference): A widely used instrument for day trading because they let traders speculate on both rising and falling markets. CFDs also support leverage, amplifying both gains and losses.
- With CFDs, you don’t own the underlying asset - you’re only speculating on the price difference.
Common Pitfalls in Day Trading
To improve their odds, day traders should watch out for:
- Lack of Research: Skipping your own analysis can lead to uninformed trades and losses.
- Emotional Trading: Letting emotions drive decisions often results in impulsive actions. Disciplined trading strategies usually fare better.
- Over-Leverage: Using too much leverage on CFDs can magnify losses, and in volatile markets, that can be catastrophic.
Day Trading with Change
With the Change App, you get access to 360+ margin instruments that are suitable for day trading - available from Monday through Friday. Our platform is built to deliver fast execution and flexibility for active traders.
Trade smart, stay disciplined, and always manage your risk. We wish you a successful trading week on Change!
Until next week!
