Day trading stock can be a great way to make profits in today’s market.
The concept is simple: You enter a stock position at or after the open of the day and you exit the same stock position at or before the close of the day.
Stock selection is important in day trading stock because the time frame in which you can profit is much shorter that in medium and long-term trading strategies.
Stocks that have a large range during the day are preferable. This simple logic is that the more a stock moves during the day the greater potential a trader has for profit during the day. Profits can be made day trading stock with smaller intraday ranges. Remember, thought the smaller the intraday range the more shares you must trade to make a profit.
Let’s look at an example
Stock A has an average intraday range of 5 points and
Stock B has an average intraday range of 1 point. Assuming a perfect day trading stock execution in each stock you would have to trade 5 times as many shares of
Stock B to equal the profit of of
Stock A. Also consider that with the number of shares traded commissions costs will also rise.
Commissions costs will logically rise in some instances when day trading stock because the more frequently you trade the higher your commission costs will be. Obviously if you trade 10 times a day every day your commission costs will be higher than if you traded the same number of shares once per week.
One of the characteristics of
day trading stock that traders like the most is that there is no overnight risk. When you close your positions for the day that’s it. Your positions won’t be affected by any bad news or earth-shattering events.
Many traders prefer this method of trading because they say it lets them sleep at night.
