DAY TRADING

Day trading (and trading in general) is the buying and selling of various financial instruments, such as futures, options, currencies, and stocks, with the goal of making a profit from the difference between the buying price and the selling price. Day trading differs slightly from other styles of trading in that positions are rarely (i fever) held overnight or when the market being traded is closed.

Day trading was originally only available to financial companies (such as banks), because only they had access to the exchanges and market data. But with recent technology such as the Internet, individual traders now have direct access to the same exchanges and market data, and can make the same trades at very low cost.
Trading Styles

There are several different styles of day trading, suited to different day trader personalities. The styles range from short term trading such as scalping where positions are only held for a few seconds or minutes, to longer term swing and position trading where a position may be held throughout the trading day. Most day trading systems have a lot of flexibility, and can have open positions for
anywhere from a few minutes to a few hours, depending upon how the trade is
doing (whether it is in profit). Some day traders will trade multiple styles,
but most traders will choose a single style and only take that type of trade.

Day trading also has different types of trade, such as trend trades, counter-trend trades, and ranging trades. Trend trades are trades in the direction of the current price movement (i.e. buying if the price is moving up), and counter-trend trades are trades against the direction of the current price movement (i.e. selling if the
price is moving up). Ranging trades are trades that go back and forth between
two prices, and are used when the market is moving sideways. Most day traders
will choose a single type of trade, but some traders will take different types, and choose which one to trade depending upon the current condition of the market.

In addition to the style and type of day trading, there are other variances between day traders. Some day traders like to make many trades throughout the trading day, while others prefer to wait for what they consider the best conditions for their trade, and perhaps only make one trade per day. However many trades are made, the trading process that is used, and the desired goal of making a profit, are the same.

The idea of making a living as a day trader appeals to a large number of people, but not everybody has a personality suitable for day trading. Even people that are successful in
other fields (even related fields), often find that they are not compatible with day trading. Day trading is a flexible profession (meaning that it can be adapted to suit different styles), but there are a few qualities that all day traders need to have in their personalities, in order to be successful (profitable), and avoid becoming a nervous wreck in the process.
Patience

When non traders imagine day traders, many people think of traders in a trading pit, wearing brightly colored jackets, shouting and waving their arms about. While this may have been true once, it is no longer an accurate image of day trading. Modern day trading
is performed by sitting quietly in front of a computer, waiting anywhere from a few minutes, to several hours, or even days, for the next trade to come along.
Being able to wait patiently is a necessity, otherwise you will find yourself taking trades that are not part of your trading system (known as making up a trade), and most likely losing money on them. Waiting patiently does not necessarily mean doing nothing, and there are many things that you can do while you are waiting for your next trade. Some day traders join live trading rooms where they can interact with other traders, some traders play computer games and watch movies, and many day traders eat their meals while they are trading (breakfast often coincides nicely with the market open).
Decisiveness

Deciding when to enter and exit trades is one of the most basic functions of a day trader, and it is important that these decisions are made as efficiently as possible. Being
decisive is vital to successful day trading, otherwise you will only sit and watch trades that you should have actually taken. Being decisive does not mean being rash, and taking trades that you are not sure about, but it does mean acting promptly when a trade does come along. A common pitfall that many beginning day traders come across is seeing a trade occurring, but hesitating and waiting for the trade to start moving into profit before entering (waiting for confirmation that the trade is going to be a winning trade before they enter it). This always results in an entry price that is not as good as it would have been with a prompt entry, and can turn a winning trade into a losing trade
Calmness

Remaining calm during trading is one of the most important personality traits for a day trader, but it is also one of the most difficult to obtain and practice. As humans, the
natural reactions to a winning trade are excitement and joy, and the natural reactions to a losing trade are panic and sadness, but day traders need to control these emotions, otherwise they will adversely affect their trading decisions (particularly the negative emotions). For example, the panic that occurs after a losing trade might make you take a new trade almost immediately in an attempt to make the money back, even though there was no trade according to your trading system.
Trading in Simulation

Trading in simulation is a good way to practice your patience, decisiveness, and calmness during trading, without risking any real money. After many hours, days, or weeks of
simulation, you will have a good idea of how your personality and your emotions will affect your day trading, but even then, there will still be an emotional response when you start trading live.