How To Profit From Day Trading

As a way to achieve large profits both quickly and effectively, intraday trading has its enthusiastic exponents and its insistent critics. The topic is hotly contested and, in fact, both sides have good points. Intraday trading should not be seen as a simple and straightforward get-rich-quick scheme, but neither is it a foolhardy venture.

Consistent and substantial profits are possible with intraday trading, provided that you know what you’re doing and stick to a well-tested strategy.

Key Points

  • Intraday trading involves buying and selling securities within a single day, focusing on small price movements to accumulate substantial profits over multiple trades.
  • Success in intraday trading hinges on a well-tested strategy, discipline, and the ability to buy low and sell high within the market’s fluctuations.
  • The approach carries significant risks, especially for beginners, requiring a deep understanding of market dynamics, thorough research, and reliable news sources.
  • Capital, strong nerves, and discipline in adhering to pre-defined entry and exit positions are essential to manage risks and secure profits.
  • For beginners, it’s advisable to start with a single stock, use reliable financial news sources like Hammerstone, and incrementally expand trading activities as market understanding grows.
trading information on mobile phone and screen

What is Intraday Trading?

Intraday trading, sometimes called day trading, is the practice of buying and selling securities over the course of a single trading day. Generally, this involves trading in large quantities and making multiple sales and purchases during the course of the day’s business.

Intraday traders are not looking for that one big profit but multiple small profits, which, because of the quantities they are dealing in, can actually add up to a substantial amount.

How to Come out Ahead

The golden rule is to buy low and sell high, but, of course, that’s easier said than done. Nevertheless, even more than with other forms of trading, intraday trading is based on price movements – often small fluctuations in the price of a security, which, when the movement is in the trader’s favour, can equal profit.

If you can sell multiple securities for more than you paid for them, even if the difference is relatively small, then you will be ahead on the deal. The greater a quantity of said security that you have to sell, the more profit you’ll make.

If you can continually repeat this trick of buying and then selling when the market improves, then you’ll accumulate more profit, though you have to take into commissions for making the trades into account when calculating your daily profit and loss.

It Sounds Simple – Why isn’t Everybody Doing it?

The truth is that intraday trading is potentially extremely risky, especially for beginners of those without a time-honoured strategy. To trade well over the course of a day, you need to really understand how the market works.

You need to be capable of thorough research into both the recent and the long-term history of the market in question, and have access to multiple reliable news sources. It also helps to have a large amount of capital to draw on and nerves of steel.

Learning the Ropes

To start with, spend some time understanding how the market that you’re thinking of day trading on works. Intraday trading can be done with any security, but either stocks or forex are the most common and reliable choices.

Subscribing to a reliable source of financial trading news and advice, such as Hammerstone, can help you to get up to speed quickly, and you can also discuss online trading at the forum.

Start by trading in a single stock, and monitor its behaviour and characteristics until you feel comfortable with the way that the market behaves. You can then look for the best-performing stocks and start to make some serious decisions.

A man trading the stock market

Stay Disciplined

Before you begin trading, set yourself some very definite entry and exit positions. Your entry position is at what point you buy, and your exit position is at what point you sell. The last one is the most important and will be triggered by two distinct signals.

The first is when your stock has reached a price that’s high enough to give you your desired profit. The second is when the price has dropped to where you can’t sustain any greater loss. In both cases, there’s a temptation to hang on and hope that the price improves, but this is where discipline is vital.

Intraday trading can result in losses as well as profit. A good trader needs to be able to absorb these and come back to the market afresh the next day. This is why capital is important, as well as discipline and strong nerves.

Follow market trends and stick to your strategy, and eventually you should see your profits gradually accrue.

This article is for information and educational purposes only and does not form a recommendation to invest or otherwise. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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