what is day trading? 

What Is  Day  Trading  ??

Method of short-term trading in shares in which the dealer performs a deal “position” , that ends that same day and thus not exposed to a quick and over night changes at the market or the stock, the opposite from long-term investment.
The Day Trader finds new market opportunities every single day, if for breakouts or if for breakdown ,intend to make profits at all circumstances (market goes up or down-using “short”). All that by Using advanced graphs and implement of technical analysis plus the ability to leverage given to us by the broker with whom we work.

Only at the U.S Stock Markets we are able to trade stocks with the lowest cost of  1 cent per share!!!
Day trading technique based on the theory of technical analysis and can be implemented on your PC via the Internet with the click of a button, at calculated risk.

Trade Frequency

Although collectively called day trading, there are many styles within day trading. Scalping is an intra-day technique that usually has the trader holding a position for a few minutes. Shaving is a method which allows the trader to jump ahead by a tenth of a cent, and a full round trip (a buy and a sell order) is often completed in under one second. Instead of bidding $10.20 per share, the scalper will jump the bid at $10.201 becoming the best bid and therefore the first in line to be able to purchase the stock. When the best “Offer” is $10.21, the shaver will again jump first in line and sell a tenth of a cent cheaper at $10.209 for a profit of 0.008 of a dollar. The profits add up when using 10,000 share lots each time and the combined earnings from Rebates (read below) for creating liquidity. A day trader is actively searching for potential trading setups (that is, any stock or other financial instruments that, in the judgment of the day trader, is in a tension state, ready to accelerate in price in either direction, that when traded well has a potential for a substantial profit). The number of trades you can make per day are almost unlimited, as are the profits and losses.

Some day traders focus on very short-term trading within the trading day, in which a trade may last just a few minutes. Day traders may buy and sell many times in a trading day and may receive trading fee discounts from their broker for this trading volume.

Some day traders focus only on price momentum, others on technical patterns, and still others on an unlimited number of strategies they feel can be profitable.

Some day traders exit positions before the market closes to avoid any and all unmanageable risks — negative price gaps (differences between the previous day’s close and the next day’s open bull price) at the open — overnight price movements against the position held. Other traders believe they should let the profits run, so it is acceptable to stay with a position after the market closes.

Day traders sometimes borrow money to trade. This is called margin trading. Since margin interests are typically only charged on overnight balances, the trader pays no fees for the margin benefit, although they still run the risk of a margin call, The margin interest rate is usually based on the Brokers call.

Profit and Risks

Because of the nature of financial leverage and the rapid returns that are possible, day trading can be either extremely profitable or extremely unprofitable, and high-risk profile traders can generate either huge percentage returns or huge percentage losses. Some day traders manage to earn millions per year solely by day trading.

Because of the high profits (and losses) that day trading makes possible, these traders are sometimes portrayed as "bandits” or "gamblers" by other investors. Some individuals, however, make a consistent living from day trading.

Nevertheless day trading can be very risky, especially if any of the following is present while trading:

• trading a loser’s game/system rather than a game that’s at least winnable,
• trading with poor discipline (ignoring your own day trading strategy, tactics, rules),
• inadequate risk capital with the accompanying excess stress of having to “survive”,
• incompetent money management (i.e. executing trades poorly).

The common use of buying on margin (using borrowed funds) amplifies gains and losses, such that substantial losses or gains can occur in a very short period of time. In addition, brokers usually allow bigger margins for day traders. Where overnight margins required to hold a stock position are normally 50% of the stock’s value, many brokers allow pattern day trader accounts to use levels as low as 25% for intraday purchases. This means a day trader with the legal minimum $25,000 in his or her account can buy $100,000 worth of stock during the day, as long as half of those positions are exited before the market close. Because of the high risk of margin use, and of other day trading practices, a day trader will often have to exit a losing position very quickly, in order to prevent a greater, unacceptable loss, or even a disastrous loss, much larger than his or her original investment, or even larger than his or her total assets.

History

Originally, the most important U.S. stocks were traded on the new york stock exchange. A trader would contact a stockbroker, who would relay the order to a specialist on the floor of the NYSE. These specialists would each make markets in only a handful of stocks. The specialist would match the purchaser with another broker’s seller; write up physical tickets that, once processed, would effectively transfer the stock; and relay the information back to both brokers. Brokerage commissions were fixed at 1% of the amount of the trade, i.e. to purchase $10,000 worth of stock cost the buyer $100 in commissions.

One of the first steps to make day trading of shares potentially profitable was the change in the commission scheme. In 1975, the Unites States Securities And Exchange Commission (SEC) made fixed commission rates illegal, giving rise to discount brokers offering much reduced commission rates.