Every week we provide insights into popular assets and hot questions, so you can easily learn more about the investment market in bite-sized pieces.
In this Markets in Focus we take a closer look at Day Trading.
What is Day Trading?
Day trading, also known as intraday trading, is the practice of buying and selling financial instruments—such as CFDs—within a single trading day. A typical day trader starts trading when the market opens and closes all positions before the market shuts. The goal is to capitalize on small price movements throughout the day.
Day traders can speculate on a wide range of assets, including stocks, foreign exchange, indices, cryptocurrencies, and commodities.
While day trading offers the potential for quick profits, it is also highly risky. Prices can fluctuate rapidly, so traders must conduct thorough research and never trade with more money than they can afford to lose.
Unlike long-term investing, which focuses on buying and holding assets in hopes of gradual value appreciation, day trading relies on short-term market fluctuations to generate profits.
How Day Trading Works
Day trading is driven by price volatility, meaning traders often seek assets with significant movement throughout the day. Liquidity—how easily an asset can be bought or sold—is another key factor traders consider.
CFDs (Contracts for Difference) are popular instruments for day trading because they enable traders to speculate on both rising and falling markets. Additionally, CFDs allow for the use of leverage, which can amplify both profits and losses. Importantly, CFDs provide exposure to price movements without requiring ownership of the underlying asset.
Common Pitfalls in Day Trading
To improve their chances of success, day traders should be mindful of common mistakes, including:
Lack of research:
Traders who fail to conduct their own analysis risk making uninformed decisions, increasing the likelihood of losses.
Emotional trading:
Allowing emotions to dictate trades can lead to impulsive decisions. Traders who maintain discipline and follow a strategy tend to perform better over time.
Day Trading with Change
The Change App offers access to 350 margin instruments for day trading, available Monday to Friday.
We wish you a successful trading week on the Change App.
Until next week!
