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How Does Day Trading Work?

Day traders are not really what you would call “long-term” thinkers. Many day traders will buy and sell stocks based on current events—anything from quarterly profit statements to product launches or major announcements. We’re focused on what’s happening right now. Other traders might use sophisticated algorithms or analyze charts to try to figure out when might be the best time to buy or sell. They use different forms of analysis called technical analysis and some form of fundamental analysis.

A day trader tries to make money one of two ways. If a day trader sees that a stock is moving higher or thinks that it might go higher that day, they’ll buy the stock and then sell it once its value goes up.  But if the stock’s value drops, then they’ll lose money when they sell it. Pretty straightforward!

On the other hand, if a day trader senses that a stock might take a nosedive that day, they might try to “short sell” it. That’s just a fancy term for betting against the stock. When someone short sells a stock, they profit when the price of a stock goes down.

With either strategy, day traders are hoping that those stocks will move in the direction they expected them to. If the stock is not moving, then profit cannot be made on this kind of stocks. So, we don’t like stocks that are flat. We like fluctuations. Day traders are not afraid of the stock market’s volatility in the short term. Instead, they want to take advantage of it.

Click the link below to learn How to Day trade for a living.