Intraday trading and investing in stock trading market are
defined differently in stock market. Nonetheless, many people remain confused
about the terms and use them interchangeably. Traders are people involved in
intraday trading or what is also referred to as day trading. The other category
referred to as investors are people who put money on stock for long period and
wait for the shares to increase in value. They sell their stock after it appreciates
to make profits.
Intraday trading is rather complicated unlike investing in
shares where you only require considering the fundamentals of the company you
are investing in. Day trading is risky. The trader is supposed to be quick in
determining the technical view of the company as the markets are volatile and
the levels change fast.
Smart intraday trading starts by identifying the right
brokerage. Consider the features being offered by the software, the available
markets, commissions, fees and market data feeds required. Simplicity of the
software is indispensable to consider. Avoid software that includes a lot of
factors since it will be difficult for you to identify the leads.
Choose your market wisely. The markets are suited for
different kinds of trading thereby the importance of determining the correct
market for you. Factors that are considered when determining the best kind of
market for a trader include tick sizes, starting and maintenance margin
requirements, volatility and values.
The stocks to invest are another important factor an
intraday trader should not disregard. Volatility and liquidity of the shares
should be considered. Liquidity refers to stock volume and allows you to enter
and leave the market at the right price. On the other hand, volatility refers o
the changes that shall occur in the market in the course of the day. Since you
are looking for profits, you will need to purchase stocks when they are at a
lowest price and sell them when they are at the highest price.
Investors are advised to consider investing in stocks that
have high volume. These stocks are generally referred as liquid stock. You can
start with paper trading and then proceed to other forms of technical trading
once you gain some experience in the market.
In intraday trading it imperative to understand that stocks
which are strong or weak today may not remain like that tomorrow. This means
that you should avoid taking trades to the following day if it is possible. You
should also stay updated with the latest news since the general public
psychology is highly influenced by the media.
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