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What is Daytrading?

Info by Never Rich Enough | 23/04/2012 at 14:42

There are several strategies that can be used on the stock market. One is day trading. Day trading is basically the opposite of a long-term strategy.

In a long-term strategy we are calculating in months or years. We focus on papers that can be sold profitably after a period of time or we are only thinking of a regular dividend.

That is different at daytrading: Here we are calculating in seconds, minutes or hours. Each market price is subject to some fluctuations within a day (some more, some less). Daytrader are trying to take advantage of these price fluctuation within a day. They want to buy some papers for a cheap price to sell them quickly after a short time for a higher price profitably, sometimes after a few seconds or minutes. Especially popular for daytrading are penny stocks with a little value.

That this pays off, appropriate high sums of money have to be in use or the market value has to have strong fluctuations. Of course, day trading can be very dangerous. No one knows how the price is really developing and under circumstances, a paper falls down and down during a day, so that there is no possibility to sell the paper for a higher price than the purchase price again.

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