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and understanding participate in this high-stakes activity.

The Basics of Day Trading

the stock markets and on the foreign exchange (forex), where currencies are traded.

Day traders are attuned to events that cause short-term market moves. Trading based on the news is one popular technique. Scheduled announcements like releasing economic statistics, corporate earnings, or interest rate changes are subject to market expectations and market psychology. That is, markets react when those expectations are unmet or exceeded—usually with sudden, significant moves that can benefit day traders.

Day Trading Strategies

A trader needs to have an edge over the rest of the market. Day traders use any of a number of strategies, including swing trading, arbitrage, and trading news. They refine these strategies until they produce consistent profits and limit their losses.

There also are some basic rules of day trading that are wise to follow: Pick your trading choices wisely. Plan your entry and exit points in advance and stick to the plan. Identify patterns in the trading activities of your choices in advance.

Day traders use numerous intraday strategies. These strategies include:

Scalping: This strategy focuses on making many small profits on ephemeral price changes that occur throughout the day. Arbitrage is a type of scalping that seeks to profit from correcting perceived mispricings in the market.

Range/swing trading: This strategy uses predetermined support and resistance levels in prices to determine the trader's buy and sell decisions.

News-based trading: This strategy seizes trading prospects from the heightened volatility that occurs around news events or headlines as they come out. One type of news-based trading involves whether a merger or acquisition that has been announced will go through or not.

High-frequency trading: These strategies use sophisticated algorithms to exploit small or short-term market inefficiencies.

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Day Trading Strategy Breakdown

Type Risk Reward

Swing Trading High High #OFN]