How to Day Trade

What is day trading, and how does it work?

Day trading refers to buying and selling securities and stocks, then selling them within the same day with the goal of making a profit. At the close of the market day, a day trader will have closed all their positions and realized any gains or losses.

Day trading is the opposite of a long-term investment strategy, in which one holds stocks or securities in hopes that they appreciate in value over time. Instead, day trading is about buying the dips and selling high in the short term – the long-term prospects of a stock or security mean far less than immediate volatility.

Day trading can be risky. Day traders are inevitably going to lose money on trades, and it can be quite difficult to become a profitable day trader.

Key takeaway: Key takeaway: A day trader is someone who buys and sells stocks and securities in a single day, hoping to make a profit on short-term activity. Day trading can be risky. 

What is a swing trader?

A swing trader is similar to a day trader, but they are not the same. A swing trader makes trades over multiple days in hopes of profiting off longer-term fluctuations in the stock market. Swing traders may sell some of their securities one day and buy more a few days later, but the idea is to allow more time for the investment to go through peaks and valleys while still owning it during that process. Normally, swing traders own securities for a few days or weeks. Day traders don’t do this, as they only own securities for a day, although both day traders and swing traders perform a type of short-term trading.

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How to Day Trade

The best day trading stocks can be found on any stock exchange in any country. And you can day trade based on a company’s recent news. Other methods include using sophisticated software and scalping. Scalping is when the trader takes advantage of many small changes in a stock’s price.

Day trading can be as simple as buying and selling with the software or broker you currently use. It helps a lot to have software that will immediately buy or sell when you tell it to.

But, you can also use trading apps and brokers. And you can find trade opportunities on other countries’ exchanges.

9. Twilio Inc

Twilio is a cloud communications platform. It allows software developers to programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using its web service APIs. Twilio has evolved as the top cloud computing company. Since its IPO in 2016, it is continuously growing and is a $62 billion company today. The fiscal year 2020, ended with exceptional performance: total revenue rose by 55% and the company had more than 221,000 active customers. In the recent quarterly report, the company reported: ⦁ Revenue of $669 million, up 67% year-over-year ⦁ More than 240,000 active customer accounts, compared to 200,000 Active Customer Accounts as of June 30, 2020 Since the pandemic, Twilio stock is on a rising streak. From a price of $80 in March’20, the stock rose to $435 in Feb’21, exhibiting an approx. 450% increase in less than a year. Currently, Twilio share is trading at $367.

Active customer accounts are an important indicato

Active customer accounts are an important indicator of the growth of Twilio’s business. It indicates the market acceptance of its platform and future revenue trends. With the exponential growth in its stock price and the volatile nature of the stock, makes Twilio is an excellent Day trading stock. Get to know the best signal providers.

Teladoc Is The Future Of Doctor Visits

Teladoc Health provides virtual healthcare services through the internet and mobile apps. The company has been in business since 2002, but its mission has become more essential than anyone could have guessed.

Typically, Teladoc benefits from at least two things: the high cost of healthcare in the United States and the large number of rural communities that don’t have access to local doctors.

The company’s services provide HIPAA-compliant connections between patients and medical professionals, making it cheaper and easier for anyone to get expert health advice.

More recently, COVID-19 has made Teladoc’s value skyrocket. As more people prefer virtual doctor visits so they can avoid exposure to coronavirus, and add to Teladoc’s top line growth.

Need Vacuum Insulated Mugs? Check Out Yeti

Yeti makes outdoor lifestyle products. It’s best known for its vacuum-insulated mugs that can keep ice frozen for well over a day. The company also makes ice chests, coolers, and similar products for outdoor adventures.

Yeti products don’t come cheap. Consumers pay a premium for superior technology and manufacturing. The average person probably wouldn’t spend $20 on a 10-ounce Yeti lowball cup. Those with disposable income, however, see Yeti products as good buys that will last a lifetime.

The company hasn’t had any problems generating revenue. It nearly tripled its sales in recent years.

Yeti stock prices leap around quite a bit. Over the course of a day, the stock price will change by at least $1. That doesn’t sound like much, but it creates daily opportunities for traders to profit.

If you get to know Yeti stock well enough, you could potentially buy it at the day’s lowest price and sell at the day’s highest price. Even if you only make $1 per share, those profits could add up over time.

4. Best Incremental Investing App: Acorns

  • Cost per trade: $3 or $5 per month, depending on plan choice
  • Account minimum: $5
  • Best for: Beginners with little to invest

The Acorns investing app is geared toward investors who are just starting to build a portfolio and can only do so with smaller amounts of money. This app, which charges a flat monthly fee ranging from $3 to $5 depending on the account type you choose, invests your spare change for you automatically.

Acorns’ two plans are called “Personal” and “Family.” The Personal plan comes with a brokerage account, a pre-tax IRA, a checking account, a debit card, financial advice and more. The Family plan opens things up even more, as it comes with all of the above, in addition to an investment account for your children’s future.

Once you create an Acorns account, you’ll link it to your bank account. The Acorns app then reviews your spending. Once your spare change totals at least $5, the app will invest it in a portfolio of ETFs. It’s a very simple way to grow your investments over time with smaller amounts of money. The only drawback, however, is that investment options are limited to ETFs. If you’re looking for an app that offers stock trading, you’ll need to consider another day trading app from this list.

2. Best Free Day Trading App: Webull

  • Cost per trade: $0 for stocks, ETFs and options
  • Account minimum: $0
  • Best for: New investors looking to learn

Webull is a commission- and minimum-free brokerage service that features an extremely easy-to-use mobile app. The brokerage’s apps are packed with relevant information about all types of investments and markets, including initial public offerings (IPOs), dividends, popular ETFs and industries, Forex and even more.

You can explore all of the above insights and immediately make investment decisions based on your findings. While you can trade just about any type of security through this app, such as stocks, options and ETFs, Webull will soon have a cryptocurrency trading feature as well.

Trading Platforms

The trading platform you use for your online trading will be a key decision. Do you need advanced charting? Can you automate your trading strategy? Can you trade the right markets, such as ETFs or Forex?

There are some important decisions to make when choosing your trading platform or stock broker, and many will depend on you and you trading style. Read more about choosing a stock broker here and trade today.

Tools

Education

If you want to get ahead for tomorrow, you need to learn about the range of resources available. It is particularly important for beginners to utilise the tools below:

  • Blogs and forums – These provide a fantastic opportunity to learn from experienced traders. Traders may offer techniques for scanning potential stocks. In addition, you can learn the secrets of profiting from short, sharp price fluctuations. You could even get day trading stock picks for free.
  • Courses – There is now an abundance of online and face-to-face courses available. These can teach you everything from the basics of day trading stocks to in-depth technical stock market analysis. On top of that, you will often discover the risks of certain strategies and how to avoid them. All can help you steer clear of the most common mistakes made by intraday stock traders.
  • Tutorials – These can come in the form of training videos, PDFs, or other written documents. They can walk you through getting set up with new software for stock selection and creating stock alerts. All of which may help you capitalise on the most volatile stocks and increase that overall salary.
  • Newsletters – Online stock picks newsletters can prove useful. They often do the scanning for potential stocks for you, while displaying stock charts to support their findings. If you’re looking for the best stocks right now, they can often be worth exploring.
  • Stock websites – These sites are another great place to go for hot stocks and recommendations. Often, they also offer useful definitions for beginners and help you define criteria when searching for opportunities.
  • Books – Day trading stock market books are another fantastic resource. They can help you do everything from identifying hot oil stocks to avoiding illiquid stocks. You will also find niche books. So, if you were interested in day trading penny stocks, for example, the right book could help you identify the best day trading stocks under $5.

Stock Picking Software

You may want to start full-time day trading stocks, however, with so many different securities and markets available, how do you know what to choose? Do you want to start day trading gold stocks, bank stocks, low priced stocks, or perhaps Hong Kong stocks?

This is where a stock picking service can prove useful. But what precisely does it do and how exactly can it help? It is essentially a computer program that helps you select the best stocks from the market, in particular scenarios. It can then help in the following ways:

  • The software usually streamlines the process of pouring through large amounts of data and finding potential opportunities that fit within certain criteria.
  • You will often get real-time email and text alerts when new trade opportunities arise.
  • Many stock pickers have an active and helpful chat room that will help you learn how to start screening for the stocks you’re interested in.
  • Plenty of providers offer market outlooks at the beginning of the day, plus stock ideas and techniques for capitalising on day trading the most active stocks.
  • The software is often versatile. So, it can be used to help you start day trading dividend stocks, IPO stocks, and blue-chip stocks.

Overall, such software can be useful if used correctly. It can swiftly create a stock watch list, allowing you to focus your time on crafting a strategy. However, it’s important to note such systems should only be used to supplement your strategy and not as comprehensive day trading stock advisors.

Demo Account

A day trading stock simulator that’s free is a fantastic way to learn about the markets.

So, how does it work? Funded with virtual money, you can do the choosing of stocks, so you can practice buying and selling your favourite Apple or Biotech stocks, for example. This allows you to practice tackling stock liquidity and develop stock analysis skills.

Because you practice against real historical data, you can develop specific strategies that will be best for the NASDAQ or NYSE, for example.

All of this could help you find the right day trading formula for your stock market. Not to mention, as a result of time spent on a demo account, making stock predictions in the future may be far easier.

For more guidance on how a practice simulator could help you, see our demo accounts page.

Remember – if you want to make $100 a day trading stocks, whether you are from Canada, India, Singapore, Australia, or the Philippines, you will need to utilise as many of the resources above as possible.

8. Be Realistic About Profits

A strategy doesn't need to win all the time to be profitable. Many traders only win 50% to 60% of their trades. However, they make more on their winners than they lose on their losers. Make sure the risk on each trade is limited to a specific percentage of the account and that entry and exit methods are clearly defined and written down.

Day Trading FAQs

These are common questions asked by aspiring day traders.

When is the best time to day trade?

Generally, the biggest movement occurs around 10:30 a.m. ET, about an hour after the market opens. Later in the day, the market typically cools off, and there is less volatility. Volatility is how day traders make money (buying the dips and selling high), so the less volatile the market, the less appeal to day traders. Of course, every market day is unique, and there could be extenuating circumstances that drive volatility in the afternoon as well.

How much can you make day trading?

The amount of money a day trader can make depends on the fluctuations of the market and their positions. Day traders could make or lose a significant sum of money at any given time. There are no guarantees of profit when investing in the stock market, especially in the fast-paced world of day trading.

How much money do you need to start day trading?

Theoretically, you only need enough money to purchase one stock. If you were incalculably lucky, you could turn that one stock into a fortune, however unrealistic this theoretical example is. In reality, day traders often lose money long before they make a profit. So, it is best to only invest disposable income in day-trading activities. Day trading with retirement savings or borrowed money is never advisable.

What Makes Day Trading Difficult?

Day trading takes a lot of practice and know-how, and there are several factors that can make the process challenging.

First, know that you're going up against professionals whose careers revolve around trading. These people have access to the best technology and connections in the industry, so even if they fail, they're set up to succeed in the end. If you jump on the bandwagon, it means more profits for them.

Uncle Sam will also want a cut of your profits, no matter how slim. Remember that you'll have to pay taxes on any short-term gains—or any investments you hold for one year or less—at the marginal rate. The one caveat is that your losses will offset any gains.

As an individual investor, you may be prone to emotional and psychological biases. Professional traders are usually able to cut these out of their trading strategies, but when it's your own capital involved, it tends to be a different story.

About Vanessa Adelman

Vanessa Adelman graduated with an Interdisciplinary degree. She majored in Entrepreneurship, Painting, Music and Film. Shortly after, she received a copywriting mentorship with Mark Morgan Ford. Then, she earned her AWAI Verification. Now, Vanessa freelances in the financial direct response industry. She’s been investing since 2016. In her free time, she enjoys books about money and wealth. She loves being with her boyfriend, hunting, fishing and going on outdoor adventures.

Trend or Range

The trend and range of investments are other components to consider. There are range traders, trend traders, and those that do both effectively. Range refers to the difference between a stock's low and high prices in a specific trading period, while trend refers to the general direction of a stock's price. The prices could be continuously moving up or down, signifying an uptrend or downtrend.

If you prefer trading ranges, only trade stocks which have a tendency to range. If you utilize a trending strategy, only trade stocks that have a trending tendency.

A stock screener can help you isolate stocks that trend or range so that you always have a list of stocks to apply your day trading strategies to. Finding stocks that conform to your trading method will take some work, as the dynamics within stocks change over time. It’s time well spent though, as a strategy applied in the right context is much more effective.

14. AMC Entertainment

AMC Networks is a global entertainment company known for its popular and critically-acclaimed content. It is often trending due to its memes. Infact it has been titled one of the best meme stock of 2022. In its recengt quarterly report, the company published: ⦁ Revenue of $445 million, last year second quarter revenue totaled $18.9 million ⦁ Net loss was reported at $349 Currently at a market valuation of $24 billion, AMC share is trading at $47. The share performce of the meme stock is shocking. Trading at a price of $2 at the start of the year 2021, the stock has shown a staggering improvement of over 2000% in less than a year.

Its volatility and trending nature makes AMC Enter

Its volatility and trending nature makes AMC Entertainent one of the best day trading stocks of 2022. No one can predict what the future holds for this meme stock but the current year has been full of positive surprises for the company and an excellent investment for investors.

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