In today article we will explore day trading, what it is and what to know before trying it.
What is day trading
As its name suggests, it’s a way of trading that only open and then closes all of his position for one day. For exemple it’s will open and closes a lot of position during the day and when the market close or when the day is over the trader will liquidate all of it’s position. He or she does that in order to not be influenced much by external factor during the night if he trade crypto that is a market open all the time instead of the stock market.
Differents methods of day trading
The trend trading : The trader will identify a trend thanks to indicators like RSI or MCAD and will capitalize on it until there is a reversal. He can benefit from bullish trend or bearish trend through tools such as long ( you bet that the price will go up ) and short ( you bet that the price will go down ) if the price does the opposite you lose money.
News trading : The trader spot official announcement that might move the market to enter early in the move ( CPI or unemployment rate usually bring volatility to the market )
Breakout trading : The trader enter trade when a key level has been break. For exemple after a range or a trend line break. In this exemple with BTC/USD we can see both instance for the first circle the trader would’ve have open a long position and for the second he or she would’ve have shorted it
And for the people that have seen my previous article about RSI can spot the divergence that predicted the reversal : )
There are a lot of methods ( scalping, swing trading… ) that can be use but i’ve only presented the one that are my favorites .
How to know if you are the right person for day trading
You can manage stress
You want quick profit ( be careful )
You have a lot of time ( you need to always be on alert )
You have a lot of knowledge about technical analysis
You know how to mange your emotions ( Never make impulsive actions )
You have a good risk management ( Don’t trade all your portfolio in one trade please )
Conclusion :
Day trading is very risky especially for beginner so i will advice you to use a demo account, I personally does that on TradingView. Don’t forget to educate your self through videos and article.
As always thank you for reading !