The action of buying and selling a stock within some period of time with a purpose to get the maximal possible profit is a best online stock trading. Trader’s main task is to get maximal profit from minor price fluctuation by using the borrowed capital (leveraging) expecting that profit will be larger than the interest payable. Highly liquid indexes and stocks are the perfect tools for this.
Day trading is the same process but started and finished during the same day. This means that all positions opened in the day should be closed by the midnight. Probably this is the most common style of active trading mostly used by professional traders and market makers. Recently, with the implementing of online trading, the traders beginners also gained access to this kind of trading. It’s necessary to admit that day trading can be enough risky game for the novice or traders not having enough knowledge of this trading method.
Stock trading strategies
There are several things that can be good indicators of possibly profitable day trading in a stock – volatility, and liquidity. Volatility means expected a difference of stock’s daily price, i.e. limits of operation of a day trader. The bigger volatility the larger profit or loss can be gained. Liquidity allows a trader to open and close positions at a good price, i.e. bid/ask difference of the stock. Here follow several most common stock trading strategies of the day traders:
- Scalping. Being one of the most popular strategies its meaning is to sell the stock right after the price movement will make the trade profitable. The target of the strategy is to get minimal possible profit.
- Fading. This strategy uses the technology of shorting stocks after fast price rising. Being enough risky Fading strategy still can be highly rewarding.
- Daily pivots. The purpose of this strategy is to get profit from the daily volatility of the stock. A trader using this strategy will try to buy at the lowest price of the day and sell when it reaches daily’s high.
- Momentum. Trading on news releases is the main sense of this strategy. A trader buys the stock according to the news events and rides it until the very first signs of downward moving.
Day trading can be enough difficult, though very rewarding, even for the experienced traders. In order to find the best online stock trading strategy, the active traders can use any of the strategies mentioned above. Nevertheless, all costs and possible risks of each should be considered and explored in detail.