There are many ways of trading in the financial markets. One of the methods is called Day Trading, which enables you buy and sell financial instruments within the same day. The person who is invloved such trading is called a day trader, who is allowed to transact in various instruments like stocks, currencies, options and futures. Day trading differs from other styles of trading in that a trader is not allowed to hold any overnight positions. Though in the earlier days, day trading was restricted to only Financial institutions like banks, with the advent of modern technology like the internet, even individual traders have access to the current exchanges and market data, and hence can trade like the financial institutions.
Different styles of day trading like short term trading and position trading are allowed. Short term trade is one in which a trader buys or sells an instrument and the position is held only for a few minutes. Whereas, position trading allows the trader to hold on to his position, till the closure of the market on that particular day, when he has to liquidate his position. Generally, a trader who prefers to make many trades in a single day opts for short term trades, while there are other traders who prefer to make a trade and wait till the end of the day, before they square up. Either way, the object of a trader is to make a profit and to do this successfully without spending too much time Shopping around for stocks, A trader should be well versed about the market trend. Entering the market without knowledge about the trend could be very risky and could cost you dear if you are careless. Traders can have easy access to all the exchanges and their markets through reputed brokers, as they can offer direct access and also provide faster trade executions, at a lower cost. A good trader will always use the stop-loss facility, which will protect him from incurring a heavier loss, should the market swings in an unexpected direction.
