Day Trading

Parent Strategy

Day trading is defined as the purchase and sale of a security within a single trading day. It can occur in any marketplace but is most common in the foreign exchange and stock markets. Day trading is often characterized by technical analysis and requires a high degree of self-discipline and objectivity. Day traders are typically well-educated and well-funded. They use high amounts of leverage and short-term trading strategies to capitalize on small price movements in highly liquid stocks or currencies.

Day traders use numerous intraday strategies. These strategies include:

  1. Scalping, which attempts to make numerous small profits on small prices changes throughout the day
  2. Range trading, which primarily uses support and resistance levels to determine their buy and sell decisions
  3. News-based trading, which typically seizes trading opportunities from the heightened volatility around news events
  4. High-frequency trading (HFT) strategies that use sophisticated algorithms to exploit small or short-term market inefficiencies