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Day Trading 101

The method of active buying and selling of stocks, futures, currencies, and options within a single trading day is referred to as day trading. Day traders are those firms or individuals who complete a trade within a day so that they hold no open positions after the market closes, making them unexposed to overnight risks. Most day traders trade in very small changes in terms of the trend in pricing of financial instruments. Trading within a day offers uncontrolled trading activity, which requires attentive focus and enormous allotment of time specifically during hours of trading.

Day traders can be grouped into two classifications including scalpers and momentum traders. Scalpers are those trading in large quantities, which are completed in seconds or minutes. Most scalpers are large companies and financial investors. On the other hand, momentum traders are those who trade individually according to stock market trends. Momentum traders have trading volumes that are dependent on market condition.

It is important for traders to have appropriate and up to date market information specifically in acquiring a trading system, income, and market account. Market data or information provides day traders the option of which products to trade. Therefore, it is necessary to have real-time market quotes since huge losses can be obtained even through minimal delay in market information.

Day trading offers both experienced and inexperienced traders who high chances of earning money, rapid returns, and high leverage among others. It also saves traders from margin interests as well as overnight risks.

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