Day Trading Stocks for Beginners

Intraday trading stocks (Day trading) is short-term transactions on the exchange market. The very name of this strategy - Day Trading, or intraday trading - indicates that the strategy uses transactions carried out within one day without transferring transactions to the next day.

Usually, during one trading session, the value of stocks fluctuates slightly. Long-term investors only follow the general trend and do not pay attention to short price changes. Intraday investors try to predict the growth or decline in the value of assets. Therefore, they can make many transactions in one trading session.

Intraday trading is more risky compared to long-term investments. Investors need to constantly monitor changes in the value of shares and make transactions on time. If you do not notice that the price of an asset has risen or fallen, you can lose profit. Therefore, many operations in intraday trading are completed within a few minutes or even seconds.

KEY TAKEAWAYS

• Where there is activity, there is potential for volatility, and where there is volatility, there is potential for profit.
• One of the most important criteria for choosing stocks for speculation is volatility, this is the frequency of price changes, the more price jumps, the better for active trading.
• If you are up to day trading you will need to follow the charts throughout the trading session, have a large initial capital and use leverage frequently.

What is Day Trading Stocks

A day trader is not an investor because he holds a position from a few seconds to one or two hours and makes money on minor price movements. Thus, it does not leave open positions rolled over to tomorrow, thus avoiding unmanageable risks and negative price gaps.

Day trading is very different from long-term trades based on buy and hold or value investing strategies.

Once upon a time, day trading was exclusively done by banks, financial companies and professional speculators. Over time, day trading began to attract lone investors, and with the spread of electronic and margin trading, it is becoming increasingly popular even among newcomers to the market.

In fact, few amateurs achieve real success. Someone lacks self-discipline and determination, and someone lacks elementary knowledge about the principles of money management. The seeming simplicity of quickly buying and selling stocks is very often deceptive.

There are many strategies, and most of them are methods adapted for day trading, used on stock exchanges. Here are some typical approaches.

Breakout Trading

The term "breakout" refers to the situation when the price on increased volume breaks through an already existing resistance or support level. For example, if the price passes the resistance level (the area of the highest prices), the trader enters a long position, counting on the profit from the market growth. If the price breaks through the support level (area of price lows), he opens a short position, hoping to capitalize on a falling market.

Pullback Trading

The main principle of the strategy is based on the calculation of the typical behavior of prices after the formation of a trend. Before moving in a certain direction, the price rolls back for a while, and if you catch this moment accurately, you can enter the same position, but on more favorable terms.

To do this, a trader must select stocks or ETFs that have shown a steady upward movement for several days, wait for the first pullback towards the support level and have time to "jump" into the transaction before the price resumes its upward movement. For pullback trading, it is important to have an established trend and remember the basic rule: the longer the trend lasts, the more likely it is that it will continue moving in the same direction.

Scalping

This is the name of the type of trading, which consists in making a large number of transactions in a short time, counting on a minimal but frequent win. One of the advantages of the strategy is the ability to start trading with a small amount. Most scalpers trading on the Russian market have less than 100,000 rubles in their account. A comparable low entry threshold exists for scalping American futures - $500.

Best Day Trading Stocks

There are several types of investment and trading in the financial market, these are long-term and short-term transactions.

Long-term trading does not provide for the investor to regularly monitor market changes, since for the most part such a model is chosen as an alternative to a deposit, so that money is simply used and brings more interest over the years than in a bank, and therefore fundamental analysis with long-term prospects is more important here, and short-term trading or active speculation, on the contrary, enable an investor or trader to earn within an hour, a day, a week, precisely due to the fact that the search for entry into the transaction is based on indicators and the news background in the shortest possible time, that is, the search for conditions to earn Here and now.

One of the most important criteria for choosing stocks for speculation is volatility, this is the frequency of price changes, the more price jumps, the better for active trading. Of course, the volatility of stocks can change over the years, but in this article we propose to get acquainted with Canadian stocks for active trading, here is the Canadian stock list we've created for you, if you wish to start trading stocks, it's a good choice to go with.

Here are the most active stocks and they have the highest trading volumes on the Canadian stock market. Huge volumes are the result of the execution of a large number of orders at certain price levels when large players enter the market.

Where there is activity, there is potential for volatility, and where there is volatility, there is potential for profit.

The list of the most active stocks in Canada

How to day trade stocks

For Day trading to be successful you should follow a few simple rules:

• Limit the number of assets to trade. 2-4 highly liquid instruments are enough to conclude up to 10 transactions per day, which will bring high income. At the same time, the investor has the opportunity to monitor the situation on the market and accompany open positions.
• Make a clear trading plan and stick to it scrupulously. This does not mean planning the number of transactions for each trading day, but the exact conditions for entering a transaction, the level of loss limiting and profit taking (or at least their conditions) the trader should know even before placing an order. In this case, there is no need to waste time on constant maintenance of open positions, and the trading participant can focus on choosing the moment to conclude the next transaction.
• Be sure to take profit when the target for the transaction is completed. As traders say, fixed profits do not bring losses. If the probability of further price growth is high, you can leave the profit to grow, but you should definitely move the Stop Loss order in accordance with the new vision of the transaction.
• Be sure to limit the loss, close the unprofitable position without hesitation. You can hope for a price reversal and the exit of such a transaction into profit for several days, but this contradicts the very principle of intraday trading. This is fraught with lost profits, which could have been obtained by closing with a minimal loss. In addition, such a reversal can not be expected. There are enough examples in the history of the markets when a continuous fall in the price of an asset continues for years.
• Use different trading systems for different phases of the market. Experienced traders are well aware that trending TSs bring profit during the directional movement of the markets and become unprofitable in the flat. The opposite is also true: a system that works well in a flat trend can bring huge losses when a trend develops.

Some practical tips:

• Trade strictly according to the schedule. For example, within 30-60 minutes after the start of the trading session, you should not conclude transactions due to the increased volatility and unpredictability of price movements at this time. It makes no sense to trade during periods of minimal volatility, for example, during the Asian session on the Forex market or the European session on the cryptocurrency market.
• In case of an unfavorable situation on the market, positions should be closed without waiting for the achievement of goals or triggering stops. Such a situation can be provoked, for example, by the publication of company reports or macroeconomic data. Another example is the problems of the Chinese real estate sector. The unpredictability of the situation there can lead to huge volatility in the securities of industry representatives.
• Be sure to close positions during the day. Carrying over to the next day is a bad practice for intraday trading. During breaks between sessions, significant events are possible that will significantly affect the price. A situation is likely when the apparent lost profit will turn into significant losses. At the same time, even stop orders will not help to limit them if the markets open with a gap.
• Actively use Trailing Stop in case of significant price movements towards the targets. This will protect the position from sudden powerful reversals (especially typical for volatile markets, such as cryptocurrency) and allow most of the price momentum to be realized.

How to Trade Stocks in Canada

You will need to do some heavy lifting before buying stocks in Canada and if you want to know how to do that, we suggest reading “How to trade stocks in Canada” article. You will have a fuller understanding of stock trading, as well as what moves stock prices, and of course the steps on how to create your own trading strategy and more.

Bottom Line on Day Trading Stocks for Beginners

Intraday trading is a variant of speculative trading in stocks and other securities, in which an investor makes several transactions within one day.

There are four main intraday trading strategies: scalping, news trading, fading and breakout trading. Each strategy differs depending on what level of risk an investor is willing to accept, how often he decides to make transactions, and on the basis of what he will make decisions to sell or buy securities.

Intraday trading has more disadvantages than long-term and medium-term investments. Investors need to follow the charts throughout the trading session, have a large initial capital and use leverage frequently.

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