What is Day Trading?
Day trading, like any other trading, involves the buying and selling of stocks or securities and other financial instruments.
When day trading, an investor generally buys and sells shares within the same day.
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A key goal of day trading is to make the most profit in the shortest amount of time.
While many investors own shares of companies in the hopes of building profit over time, a day trader actually holds no ownership at all.
A person who is dedicated to day trading will spend the majority of their day on the internet analyzing trends in the market to ensure they are buying and selling at the exact right time.
What factors need to be considered when Day Trading?
Liquidity: Liquidity describes the ease at which a security can be traded. Stocks that have high liquidity can be traded easier, and thus are ideal for day trading. A big advantage to a liquid stock is that frequent trades will not depreciate its value.
Volatility: Volatility describes a security’s price fluctuation throughout the day. A highly volatile stock is ideal for day trading because it can often be purchased at a very low price and sold at a much higher price within the same day.
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