All About Day Trading Stocks

In short, day trading stocks is defined as buying or short selling a stock, and then closing that position within a single trading day, usually within a matter of minutes or a few hours. Typically, stock day traders use leverage and short-term strategies to capitalize on smaller price movements in highly liquid assets, such as with a trending stock or volatile currency pair.

Character Traits of Day Traders

While popular, day trading is not a great investment approach for everyone. Day trading is more complex than gambling, and investors who make a living day trading stocks possess certain characteristics. To make day trading stocks work for you, consider the following.

Don’t trade without a solid understanding of market fundamentals. For example, what makes a company’s value rise or fall in both short and long periods of time? What market indicators impacts the company’s specific industry?

Trade with a suitable amount of capital that you can afford to lose. Large amounts of money, or shares, are usually needed to generate a large profit on a single trade.


Don’t risk money without a strategy. To get an edge and profit, you’ll need something that sets you apart from the regular Joe’s. Are you a news trader or stick strictly to on-chart technical analysis? How do you know where to place stop loss and take profit levels while minimizing risk and maximizing growth?

What You Need to Day Trade Stocks

To make day trading a successful long-term investment, you’ll need outside services and tools. Here’s a quick list to get you started.

Multiple News Services – Even if you’re not a news trader, it’s important to keep tabs on the financial markets. Information is power, and many day trading opportunities can be found in the news, which has a psychological impact on investors and with it, the value of a company’s stock.

Cutting-Edge Software – Traders may need specific pieces of trading software for a variety of reasons. A pattern-based trader might need pattern recognition software, while other high-volume traders might be better suited to algorithms or proprietary systems. Backtesting tools are also necessary.

Without day traders, the stock market would be less liquid and there would be less opportunities. Retail and institutional day traders play a vital role in keeping a healthy global financial system.

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