Day Trading Definition – Short-term trading of securities
What is Day Trading?
Day trading means that positions will be opened and closed again within a day. A trader takes a positioning in the market for a few seconds to several hours. Day trading is therefore the “fastest” way of trading, if you ignore automatic trading systems or high-frequency trading, which are only carried out by fast computers or close to the stock exchange.
On this page we would like to introduce you to the topic.
Trading stands for “trading” between market participants. In this context, there is often talk of the stock exchange as a public trading venue where certain assets are sold and sold. This is where the price is determined, at which you can then purchase a stock, for example. For a newcomer to trading, however, it is not purely a question of the technical handling of trading, but above all of weighing up the advantages and disadvantages of this activity and getting to know the markets and instruments. TradersClub24, the largest trading club in Germany, explains the facts of trading in detail and providing you with a comprehensive overview.
How does Day Trading work?
For the definition of day trading, it is important to first understand basic concepts. The most important terms in day trading are:
2. Trading platform
4. Trading instrument
6. Risk and Profit
A trader (or to German a trader) is a person who makes and implements trading decisions. There are many tools available in today’s digital age. An order at the broker or bank is only transmitted by telephone in exceptional cases. Trading via a tradin platform, e.g. MetaTrader, is common.
2. Trading platform
The trading software connects the trader with the broker, who sets prices and accepts orders for trading positions. In addition to order entry, modern trading environments clearly present charts with stock prices and provide technical tools for trading such as indicators and visualizations of trading signals.
The broker submits the order to the stock exchange, to a bank or to the liquidity pool. If the order is accepted and executed with it, the trader is positioned according to Long or Short. Depending on the trading instrument, you can therefore bet on both rising and falling prices.
4. Trading instrument
The trading instrument can be, for example, an index such as the DAX, a commodity we gold or a currency pairing such as the euro against the US dollar.
The value of one’s own positioning in the market increases and then falls accordingly with the trading instrument. In day trading, leveraged trading instruments are often used, which developed disproportionately in value when the underlying changes. Thus, a trader in day trading can also benefit from small changes in the market.
6. Risk and Profit
It is all the more important to keep an eye on the risk. Day trading is based on clear rules for protecting your own capital. Clear loss limits are defined and positions are closed as soon as the limit is reached.
The profit of a position or trading per se is determined by the trader’s ability to predict market movements. It is not a question of analysing and acting correctly of every movement, but of making the right trade decisions in sum. Positions are not simply started from the gut, but follow a strategy.
What day trading strategies are there?
1. Breakout trading
2. Trend-following trading
3. Mechanical Trading
4. Volatility trading
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Is trading a profession?
Unlike a traditional education or study, you cannot be certified as a trader. For Day Trader, there is no standardized certification that is equally recognized by several institutions. Although there are professional profiles, such as the securities dealer (broker) on a stock exchange or the asset manager with a licence, these are not specifically geared to day trading.
How to learn Day Trading?
There are countless ways to learn day trading. We present you a selection of alternatives with a detailed definition.
Day trading textbooks
Not only do several traders with their own experiences have their say here, but also often the focus is on scientific findings. Technical descriptions of instruments and strategies round off the large amount of specialist literature.
2. Day Trading audiobooks
For many books, the corresponding audiobooks already exist from the date of publication. Here, a speaker guides you through the contents of the book.
3. Day Trading Podcasts
The same is true of a podcast. Here, authors, speakers or traders share their own experiences on the soundtrack, which you can then access on the go either mobile or at a fixed location of your choice via the Internet and various providers (Spotify, Apple Music, Deezer).
4. Trading Video-Tutorials
Do you want to learn day trading without having to imagine facts or looking for a book? For example, video tutorials are suitable for on YouTube. For example, check out the dailyDAX opening trades from TradersClub24.
5. Trading Webinar
Through a webinar, you have the opportunity to learn day trading directly from a speaker and to communicate with the speaker via a feedback function.
These online trading trainings have become established in the financial scene, as you can participate with any internet-enabled device regardless of location. From thematic webinars to recurring market meetings and live trading, the spectrum is very extensive. The TradersClub24, for example, offers free day trading webinars and even extends this option with a live trading room. As a member of the stock exchange, you can follow the price development on a daily basis and receive moderated ideas on how to act on the markets – it is hardly possible to learn trading more easily.
coaching by professional experts makes for a more personal and longterm success, structured from the very beginning. If you consider this, tradersClub24 will provide you with a face-to-face exchange with trading experts that will address your needs and questions. Beginners and advanced learners benefit from individual training concepts. Of course, personal coaching can also take place virtually via the Internet. The great advantage of coaching is the intensive first-hand exchange, combined with interactions. More directly and especially faster knowledge can not be imparted as you learn the day trading in a practical way.
7. financial fairs and seminars
In order to get a first impression of the financial world, the providers and above all the possibilities of trading, financial fairs are very suitable. The advantage, in addition to a quick overview and the possibility to get in touch directly with providers, is the network character. Here, for example, the Financial Congress is
8. CFDs are the best instrument for beginners to learn how to trade
CFDs “Contract for Difference” allows you to trade over-the-counter through a CFD broker. This secures itself accordingly at the opening time of the stock exchange on the respective reference market and is your contact person and the counterparty of each trade. If the reference market is closed, such as the DAX after 5.35 p.m., indications are created based on related markets, such as the Dow Jones. As a trader, therefore, you only have to pay special attention to opening hours of the stock exchange and market peculiarities. CFD trading can theoretically be mapped for all markets (foreign exchange, commodities stocks, indices). Since trading does not take place directly on the market, even the smallest units are possible. An ideal starting point for the beginning of action!
9. CFD and leverage
In addition to the quick start with CFDs, the leverage effect is another argument for using this instrument in day trading. Even the smallest changes in the underlying can be worthwhile with a CFD. You have the opportunity to speculate on rising and falling prices and have a chance to profit in any market situation. Ideal conditions for making a successful decision.
Unlike a long-term investment, traders with CFDs are less interested in fundamental data and balance sheets. The chart technology and corresponding trading tools are used for decision-making. These methods are easy to learn and use patterns from the past that imply a high probability of movement in the future.
We are happy to help you learn appropriate techniques and introduce you to a profitable trading plan.
10. Trading platform MetaTrader
In order to be able to implement trading in practice, one last building block is required – the technology in trading. The MetaTrader platform is recommended, which offers beginners and professionals at the same time a wide range of opportunities for trading.
The simple structure of the MetaTrader is at the same time its great strength. Without a great deal of training time, every trader immediately discovers the range of functions and a few minutes pass before the first order is implemented. The design of the work surface can be expanded as desired. Whether you want to observe several markets, implement a variety of indicators or use drawing tools – with the Metatrader you can implement this and store it for yourself under different profiles. Neither the speed of order processing nor the reliability of the overall system suffers.
We are happy to assist you in setting up and making the best use of your trading and are always at your side if you want to take the step into the trading business. Use our 30 days of free guest accessto get started without obligation.
Key features of a professional trader
Traders need a number of personal features to operate successfully on the market. The most important are discipline, courage, flexibility, self-confidence, intuition, patience, humility and desire for knowledge. The most important point when entering the trade is discipline.
Trading as a profession
Like any profession or hobby you want to professionally pursue, trading requires a way of learning and developing expertise. In addition, the practical implementation requires many hours of practice. Trading is not suitable to get rich overnight. A return expectation of 10% to 20% per year is realistic, especially if the success is to be sustainable for years to come. In addition to the expectations of trades, discipline plays an important role. Similar to a pilot, in an unforeseen or confusing situation, a trader must adhere to exactly the previously developed rules and act accordingly. In day trading, a structured approach is necessary. Before placing a position in the market, it must be clear at all times when and under what circumstances a trading idea is discarded or where the target is reached. As a trader’s experience increases, the rules become more complex.
What are the advantages of day trading?
The starting point for a start in day trading is certainly the opportunity to make money on the capital market through targeted transactions. In theory, unlimited profits are possible, which could be generated from anywhere in the world. Trading via modern platforms and the Internet makes this possible.
Another advantage is the free time allocation. Especially with the choice of trading instruments, a trader focuses on markets that can have very different “opening hours”. In the case of trade of currency products, the range from Monday morning to Friday evening at 11 p.m. is not even interrupted by a trading pause. In addition, a profit can be achieved in the shortest possible time with little time and with the correct assessment of the market. Overall, it is assumed that a trader achieves a better performance than a passive investment in the market on average. Here, 10 to 20 percent annual profit on total capital with minimal risk is a solid target.
TradersClub24 Live Trading Room
The dream of quickly becoming rich and with the trading millionaire many have. Why not? The good thing about it is also the dangerous thing. Because it has never been so easy to take the first step alone – and to get wet feet directly. To prevent this from happening, we have established the live trading room. Here all club members and guests have the opportunity to trade LIVE together with our experts every day from 8:25 a.m. to 5:00 p.m.
Ask questions, check tricks, avoid stumbling blocks and trade as successfully as probably never before. Try us now for 30 days without obligation.