A Stock Investing Guide for Day Traders

If you are thinking about venturing into stock day trading, you may want to go through this brief stock investing guide to help you understand day trading, and plan the strategies that can help you make the most of your investment.

Looking For The Right Stocks

Since day trading focuses on short term movements and the ability to buy and sell with a very short notice, you should focus on stocks that have a volatile price fluctuations, and high trading volumes. These stocks allow for liquidity and ease of buying and selling. Be sure to have analysis charts and graphs readily available for review.

Entry & Exit At The Right Time


Day trading opportunities have extremely short windows of opportunities. Therefore, timing is critical for profits from day trading.

You will also need to have access to real time news tickers to follow major events in the stocks that you are investing.  News items can cause major fluctuations that day traders can benefit from. Early action can help maximize this benefit.

Once you have identified the highs and lows of a stock, you can define your buying and selling triggers to start trading.

Setting Your Goals & Making A Profit

While no stock market investment guide can guarantee profits, defining your goals, and then acting upon them, can be a crucial element in being a profitable day trader. There are various strategies that you can choose to employ some of which are outlined below:

  • Scalping: Scalping refers to exploiting the normal volatility in a stock price during intra-day trading and results in a sale of the stock as soon as a marginal profit is realized. In larger share volumes, this strategy can result in significant gains.
  • Short selling or Fading: Day trading does not have to be about gains from upward movement of stock prices. Your research can allow you to short sell stocks after buying at a high point.
  • Momentum Trading: This type of trading typically revolves around following news related to the stock and buying at a time when the stock may exhibit an upward trend based on positive news. The sale will be made at the point where the first signs of a downtick are realized.

Limiting Your Downside

It is inevitable that you will witness sharp stock price drops in a day trading session at some point in time. To alleviate the negative impact of such a sharp downturn, you can place a stop-loss order at a particular level that can be executed automatically in the event that a slide begins. The stop-loss trigger level can be set based on your own risk preference.

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