day trading

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What is day trading?

Day trading is a speculative trading method of buying and shorting a security or derivative within the same trading day. Positions are closed by the end of the trading day. It is based on the forecast of a financial instrument going up or down in value. Day trading can be achieved in any market, globally, it is most commonly practiced with the trading of foreign exchange (forex), stocks, options and futures contracts.

Now that we know what day trading is, who or what are day traders? Well, day trading was once an exclusive practice, reserved for people who worked at financial firms, while considering themselves “professional speculators,” or even thought it was a lucrative hobby. .

However, nowadays just about anyone can become a day trader.

The rise of electronic trading and margin trading software has become available to individuals around the world. So, how does one get started if this trading method is available to everyone, and binaries are a good starting point?

chart

Charts, technical analysis and patterns are important tools for day traders. This chart is set out to reflect the Bitcoin/USD exchange rate, which is a great market for day traders – there is a lot of volatility and action driven by news releases and trader sentiment.

how to start day trading
choose a market

The first step for a day trader is to decide which markets you will be trading, the most popular being Stocks/Shares (Apple, Samsung, Tesla etc.), Indices (Hang Seng, FTSE, Nasdaq, S&P), Forex And there are futures. , Things like gold, oil or grain prices can also be traded. Cryptocurrencies such as bitcoin and ethereum are currently a huge market for day traders as well.

The forex markets are quite popular among beginners because of the initial minimum deposit accounts of around £250. Binary options deposits can be even lower (from just £10), but are traded without margin.

Futures require more and stock trading requires the most money. Binary options offer a low cost of entry for anyone with a desire to day trade. Their shortcoming however, is a lack of leverage. Whether this is a big factor or not will depend on the trader – leverage magnifies market growth, so the fixed price element can really help manage risk – but also limit potential profit.

equipment and software

Once you know your assets, as an individual trader, you need the proper equipment and software to start day trading. As a novice day trader, you will need a fast and reliable computer, it doesn’t have to be top of the line, but not the cheapest either. Also, day traders require a fast internet connection. You want to make sure that your tables and charts are updating as quickly as possible.

Along with all this, you need a trading platform and a broker to start trading. As a trader, you would want something easy to use and not too complicated. We recommend that traders verify which software platform performs best on the demo accounts associated with most day trading platforms. As for the brokers to go with, make sure they are reputable and regulated, along with low fees, tight spreads and maybe bonuses.

Learning through virtual accounts is better than books or courses. Hands on experience introduces trading psychology (though it is vastly enhanced with a real money account). That same learning curve is difficult to achieve by flicking through “Day Trading For Dummies” or hastily written PDFs.

market hours

Another important aspect to consider before actually starting trading is the time of day and how many hours a day you will be trading. As a day trader it is important to trade the same number of hours each day in order to successfully implement and manage your strategy. The best trading hours are usually around the time the market opens and closes.

Forex trading in particular presents interesting opportunities in terms of hours. With no central market, currencies are traded around the clock. This means that there are multiple volume peaks and troughs during the wake or shutdown of new regions. The London markets may be closed – but the GBP/USD pair can still be traded by traders in Indonesia, New Zealand or Hong Kong.

These time zone cycles apply equally to cryptocurrencies. Day trading on bitcoin or bitcoin cash will continue worldwide. Lesser known digital currency like Ethereum, Ripple or DASH are also traded 24/7. Cryptocurrency has added a whole new dimension to day traders.

risk management

This type of trading requires risk to be managed in two ways, trade risk and daily risk. Trade risk is how much you are willing to lose on each trade. An ideal standard is to risk 1% or less of your tradable capital on each trade. Fixed exposure to binary options can help manage risk as the amount at risk is known at the outset.

A trader would manage this by choosing an entry point and setting a stop loss. If you reach a certain level of loss for that trade, the stop loss will take you out of the trade.

Daily risk is like trading risk in the simple fact that they both limit the total loss amount; Daily exposure only limits total losses to one day. In doing so, bad days are prevented from becoming too bad and can be recovered by a specific winning day.

taxes

There is no explicit tax applicable for day trading. Different regions treat taxes differently – and binary options are different again. For example, in the UK, binaries are classified as “speculative” and income tax is not payable. In the US, Singapore and India, however, the rules are very different.

Taxes also depend on whether you view your day trading as a career or a hobby. Professionals are likely to have profits taxed as ‘income’, whereas beginners may not. For this reason, it is important to seek local advice.

binary day trading strategy

Day trading can be very complicated and it is easy to get wrapped up with all the trending strategies and complicated chart analysis. Remember one thing that you don’t need to know it all. All you have to do is focus on a single strategy, and apply it over and over again. Try the strategy on a demo account to see how it works

Top 3 Day Trading Tips

• Be informed, always seek opportunity!
  Keep track of the latest stock market news and trends in the economy. Do your due diligence and research the companies and the market they serve. If supply is short and there are still enthusiastic buyers, the price may increase. If there is too much supply and fewer buyers, the price is going to go down. When one remains informed and knowledgeable about certain companies and their performance, massive opportunities will arise, resulting in profitable day trading.
• Be a disciplined and consistent day trader.
  Set the appropriate trade size and manage your trading bank. Most successful day traders risk 1-2% of their trading capital per trade. Follow this rule consistently, as if there were no other way. Trading the same assets at the same time of day also provides a quick learning curve that enables you to spot better opportunities or misprices, instinctively.
• be realistic and be patient
  When you find a proven trading strategy stick with it. It doesn’t have to win all the time, in fact, most strategies only need to pay off 60-65% of the time. So the key is to stick with it and stay informed with the market news and the companies you are betting on. Also, sticking with the strategy requires patience. There will be times when the market will take you for an emotional rollercoaster. It is important to make your decisions based on logic and not emotions as well as stick to your plan.

Speed

One of the most commonly used and well-known trading strategies is the “Momentum Trading Strategy”. This strategy depends on the volatility of the market. It can be used alongside other technical indicators and tools that you find on our trading platform as it relies on spotting trends.

In short, it is where a trader analyzes the markets and looks for the best performing assets over a given period of time. This includes buying these and selling underperforming assets. Being knowledgeable and knowledgeable about current market news plays a vital role in the success of this strategy.

News such as company earnings, a new deal or product launch, or some other type of breaking news related to the company can force the price to rise. There are many aspects involved with this strategy, and before implementing it into your routine, learn how to become fully aware of its intricacies. Even practice on a demo account first to familiarize yourself without risking your capital.

day trading vs binary options

Some refer to “day trading” as CFDs or spread betting. Binary options however, are on par with intraday trades, if not better. Here’s how binaries differ from traditional trading tools:

• risk management . Binaries offer a certain amount of risk. Other instruments require the trader to make assumptions about the amount of volatility that will occur – and judge risk accordingly. While possible, the fixed risk of a binary makes risk management easier.
• pays. It could go either way – due to leverage – but a binary option can only pay 90-95% profit one way or the other. Other trades may require a significant price move to move into profit, and an even larger move to show the same level of profit.
• Tax . Binary profits are generally not liable to income tax due to their being viewed as highly speculative trading. Day trading in other vehicles is treated as ‘business’ and taxed accordingly. Again, it is not clear cut, but binary options in general are more tax efficient.
• entry cost. Binaries usually require a low entry cost to start. Similarly, taking profits as well as increasing trade size – much easier with binaries as the starting point is much lower.

conclusion

So, there you have it, all you really need in day trading is consistency with trading hours and timings, a set risk level that you adhere to informally, and a strategy that works most of the time. Binary options can certainly be used within that framework. It is important not to get bogged down with these things and to have a consistent plan for all aspects of day trading, controlling for emotional factors that can disrupt your trading.