Stock Market Day Trading

Day trading stocks.  Exactly what is it?  Can you make a living trading online?  These are questions that many people these days are asking themselves.

You may have heard the term day trading and thought it is a ticket to immense riches.  But, let’s be clear, serious online day trading is a difficult proposition and you should do appropriate research before deciding to choose this as a career.

Stock market day trading can be done in a few different ways, but the technical definition is “the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close for the trading day.”  So, what exactly does day trading involve?  How do people do it?



This method of day trading follows the trend of the market and where traders look to buy stocks that are rising and sell stocks that are falling.  Traders will look at multiple time frames to determine the trend.  This can be a weekly, daily or even hourly chart.


This is also strategy that involves market timing, but unlike trend following, these traders are expecting the current trend to reverse and as such will buy stocks they think have fallen too far and sell stocks that have risen too far.


Traders using this method look for stocks that are trading in a range and identify support and resistance levels at which to buy (in the case of support) or sell (resistance).  These traders will also look for “breakouts” where a stock pops above resistance or drops below support.  The idea here is that once the support or resistance is taken out, the stock will keep going in that direction until it finds new support and resistance levels.


Scalping is sometimes referred to as spread trading and is a trading method where day traders take advantage of small gaps in the bid-ask spread.  Scalping is a quick fire trading method where positions are entered and closed within minutes or even seconds.


Some traders will enter positions prior to a significant news item like an earnings announcement.  They hope to make a profit in a small amount of time following the announcement.  Other traders may enter trades just after a news announcement in the hope that their opinion of how the market will react to the news is correct.  News announcements usually result in significant price moves in a short period of time.


These traders try to keep things simple and rely on price movement and chart patterns when determining when to make a trade.


It is estimated that nearly one-third of all trading on the US markets is by automated trading methods and computers.   These programs use high-frequency trading and automated algorithms in order to make profits.  Some members of the financial world blamed automated trading for the “flash crash” that occurred in May 2010 when the Dow Jones dropped almost 10% in a matter of 30 minutes.

These are the main methods for day trading online, but in order to be profitable, these are a few tips to keep in mind:

  • You need to have great discipline
  • You need to use a system or process that has been proven to work
  • You should try paper trading your strategy before using real money
  • You need to have enough capital
  • You need to trade an appropriate position size on each trade
  • You need to have very good risk management rules

Stock market day trading is a tough way to make a living and very few people succeed at it.  Those that try it, tend to have to endure significant amounts of stress.  While it is possible to make a living by day trading, you should realize that there is no easy way to fast riches.

Live Day Trading Example