Day trader working in office

Day Trading

Day trading means taking advantage of same-day price fluctuations in stocks, futures, or forex. Learn more about becoming a day trader, reading charts and trading strategies.

Your Guide to Day Trading

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Day Trading Basics and Tips
Frequently Asked Questions
  • How do you start day trading?

    To become a day trader you’ll first need to decide what markets– stocks, commodities or futures– you want to trade in and how much capital you need. You’ll need proper equipment and access to a trading platform. Day traders can see big price swings so you’ll need strategies like the 1% risk rule to manage risk. Lastly, you should practice trades using a demo account before jumping into live markets.

  • How can I make money day trading?

    Its not easy to make money day trading and most day traders end up with a net loss. While other factors may influence the outcomes of your trades, statistically speaking, your success depends upon four numbers– how much risk you take on, how much you profit from winning trades, how many trades you make and how many of those you end up winning. Its more important to find the right balance of those factors with a higher amount of capital.

  • How do you read a candlestick chart for day trading?

    On a candlestick chart, each candlestick indicates the open, high, low, and close price for the time frame the trader has chosen. The top or bottom of the candlestick indicates the open price, depending on whether the asset moves higher or lower during the period. Thin lines above and below the candlestick– wicks or shadows—represent the movements above and below the open and close prices.

  • How do I pick stocks for day trading?

    Best day trading stocks are those that have price volatility and robust trade volume. Volatility allows traders to take advantage of price movements while trade volume provides the opportunity to get in and out of positions quickly. You could trade on the stock’s price range over a defined time period or utilize a trending strategy to trade its general price direction.

  • How can I practice day trading?

    If you’re starting out, consider practicing your strategies using a demo account or a trading simulator. You can find those at your brokerage or a trading platform such as NinjaTrader. Its an easy way to hone your skills without risking your money. It is recommended for amateur day traders to practice for at least three months with profitable demo performance before transitioning into live markets.

  • What is day trading vs. swing trading?

    Day trading and swing trading are both fast paced trading strategies, but there are some key differences. Day traders may open and close multiple positions within the same day. Swing traders have a short to medium-term horizon with trades that take place over days, weeks or months. That means day trading has greater potential for risk and rewards and requires more active trader involvement.

  • What is forex day trading?

    Day traders can trade currency pairs in the foreign exchange (forex markets). Unlike day trading equities, there are no minimum capital requirements for forex day trading, and you could start with as little as $100. Forex markets are open 24-hours and offer higher leverage opportunities, but that also makes them more volatile with potential for substantial losses.

  • What is pattern day trading?

    According to FINRA, a pattern day trader is someone who executes four or more day trades in five business days that exceed 6% of the total trades in their margin account. Pattern day traders are required to maintain a minimum $25,000 in the margin account they place their day trades in but they may trade up to four times the maintenance margin excess. Brokers may levy additional requirements.

Key Terms

Explore Day Trading

Futures trader placing orders on a smartphone
Profile of the S&P 500 (ES) Futures Market
Pros and cons of free real-time stock charts. Pros: Real-time Excellent backup data source Great training tool for new traders Cons: Unofficial Usually comes from sole data provider Isn’t guaranteed for accuracy or timeliness
Best Free Real-Time Stock Charts
common trading terms you should know: bear(ish), short(ing), long (going long), bull(ish)
Definitions of Long, Short, Bullish, and Bearish