Day Trading is one of those words that has a lot of different definitions. Even here at SPACrun, we’ve heard the term many times and gotten confused as to what it means. Now, we’ll try to clear up any confusion and make a few things abundantly clear: Day trading is a short-term trading scheme. It’s a kind of get-rich-quick scheme that not many investors are aware of. Day trading is, in fact, an even shorter than short-term investment plan that you can use to take advantage of the market’s fluctuations. Retail and institutional investors are trying day trading in different stocks of ETFs, Mutual Funds, or Special Purpose Acquisition Company (SPAC) as they can earn huge amounts of revenue in a single day.
What is Day Trading?
Day Trading is a term and form of trading in the stock market in which an investor buys and sells shares or financial instruments on the same day. Day trading can sometimes be highly rewarding if invested with proper research. Day traders use multiple trading techniques that help them get a profit every second. Some of these techniques are Scalping, News-based trading, High-frequency trading, etc.
Scalping is one of the most popular strategies used by day traders in which they invest huge amounts of money and get profited by minor price changes in the stock. Normally they trade multiple times in a single day. News-based trading is another technique that day traders use based on positive or negative news/rumors about the stock market. High-frequency trading is mainly used by institutional investors in which they use very powerful computer systems and sophisticated algorithms to exploit short-term market inefficiencies.
But investing in day trading is not as easy as it looks. Read on as we explain how to get started in Day Trading so you don’t lose your money!
Basics of Day Trading
Day trading is a strategy that trades securities on a set schedule, usually once every day. Sounds great, right? The problem is, day traders are often so caught up in the action that they don’t realize the profits they are making aren’t real. Day trading is a great strategy if invested with enough research, but it’s not for everyone. Day Trading can be a dangerous business and it requires a lot of attention. The market is full of gigantic amounts of volatility, and traders who get used to it will be very happy. But, the truth is, not all of us are able to stand this high volatility and dependence on the market, so there are some safe and profitable ways trading can be done.
7 Day Trading Strategies for Beginners
Follow these techniques from the expert investors and you will find a correct way of Day Trading:
Research and Be Updated
Knowledge is power and Day Traders must at all times be updated with the latest stock news and updates. If you are to invest in Day Trading, you must be online at all times to check updates, ups, and downs on stocks. Keep researching how and where to invest and don’t let yourself get carried away. Capitalize on the smart money investments done by institutional investors.
Set the Fund Limit
Make up your mind on how much fund you are willing to invest in Day Trading. Again, don’t let yourself get carried away into investing a lot of your money. Know your capital and how much you can invest in Day Trading without losing much of it. We recommend investing 1-2% of your capital at maximum.
Many beginners want to make more money quickly and invest without proper research. When it comes to investing in stocks and day trading, don’t fool yourself into thinking you will make easy money. It is harder than it looks. Start small and make your way through the first couple of months before your leap in investing more.
Skip Penny Stocks
As a beginner, you will probably look for deals with low prices. While it’s a good strategy, we recommend you stay away from Penny Stocks. Penny Stocks have a nano market cap and have the least chances of hitting big and will just waste your time.
Time The Trade
When you are investing in Day Trading, you have to be careful about when to sell the stocks. Proper timing is very necessary as the market is fluctuating every second. Don’t get greedy for more. Time your trading and sell it when you think it’s time.
Day Trading can sometimes be highly rewarding while sometimes not so much. Get to reality and try to stay cool throughout the day. Don’t lose your mind over the rise and loss of stocks. Don’t get your hopes very high that you will get rich in a single day. It takes time and effort.
Stick to The Strategy
If you want to be a successful trader, you need to move fast and think fast. However, with a trading plan, you don’t have to keep thinking about it all the time. Don’t try to chase profit, instead, let the profits chase you. Stick to the strategy and don’t let your emotions get in your way.
Risks and Rewards of Day Trading
Everything in the stock market comes with some risks and some rewards. It’s not always about the profit and sometimes you just have to stick around to get to know if it’s better. Here are the risks and rewards of Day Trading!
You might have heard of many celebrities involved in day trading and how they make millions on a single day. Well, it’s not wrong. They made millions but at what risks? Know this, if a stock market or stock price moves in the wrong direction, you might lose everything. Yes! You heard that right. It’s possible you lose everything you invested. Since this is single-day trading, in most cases, it might also be unrecoverable. Many veteran investors recommend beginners to be a smart investor and invest in a long-term investments rather than seeking a quick profit.
On the contrary, if you want to take the risk and get in with Day Trading, you can make a lot of money with the proper timing of the trade. Since Stock price is constantly moving, at one point it will probably hit its peak. Boom! Sell your stock at the right time for the right price and you will be rewarded highly.
Online Trading Platforms
There are various online platforms where you can trade your stocks and financial instruments securely and risk-free. Stock Exchanges like NYSE and NASDAQ cannot be directly used for day trading so you need to look for reliable day trading platforms. For beginners, we suggest using TD Ameritrade and it provides new users with guides on how to get started with trading. Experienced investors use Interactive Brokers for online trading. Below are the best trading platforms for 2022:
- TD Ameritrade – Best for beginners
- Fidelity – Best for day traders and investors
- Charles Schwab – Best for IRA accounts
- Interactive Brokers: Best for experienced professionals
- E*TRADE – Best web trading platform
Day Trading is a high-risk / high-reward scheme. However, with proper research, trade timing, and strategy, you can invest in Day Trading and make money. Short-term investment is risky and most professional investors don’t recommend this kind of investment. However, sometimes, you have to listen to your mind and take that risk.
You can also start day trading with SPACs. For this, you will need a proper SPAC analytics tool like SPACrun. SPACrun is a definitive SPAC analytics tool that provides SPACs market depth. It has features like real-time alerts, de-spac news, RSS feeds, Reddit sentiment analysis, NAV Calculator, etc. Visit SPACrun now and get a free trial.