Members of any online investment site, such as E-Trade, TD Ameritrade, Scottrade, and TradeKing may partake in the practice of day trading.
Online monitoring of volatile securities is key in this type of investing, which often requires serious dedication and a spending amount able to easily cover commission rates with intended sale values.
Online Day Trading Stocks
Day trading is the purchase and sale of shares of any security within the same day during market hours. There are several types of quick trades, though amateur investors buying and selling online do not have access to some of the tools that professionals can use in extreme day trades.
Basic day trading online generally requires investors to monitor various stocks to pinpoint prime buy and sell times, although certain types of exchanges, such as a stop-limit buy or sell, or a trailing stop trade can do this automatically if securities are exercising adequate volatility.
What to Look for When Day Trading Online
In buying and selling securities during the same day, it is imperative to find volatility. Stocks that are fluctuating significantly are those that are ideal for any stock market success and imperative for day trading profit.
Often, low valued securities such as penny stocks are the most volatile, and in day trading, if any of these are currently bouncing both up and down, the risk is not as great as is long term trading with penny stocks, which often lack liquidity.
The key to this type of investing is to buy when a fluctuating stock is low and to sell it later when it is high. That is why the volatility of securities is an essential part of success.
Watching the Market When Day Trading Online
There are a few options that investors have in day trading stocks online. Actually watching the market, and buying or selling based on fluctuation is one method, and although market orders go through very quickly, limit orders, which can prevent loss by setting a limit on how much can be lost in a buy or sell are still safer, even for immediate trades.
For instance, if a stock has dropped in value to, say $3 per share from $3.50 hours earlier, and a trader is interested in purchasing some of its shares, it is safer to buy (if buying at once) via setting a limit buy at $3.05 or so, which might buy immediately if the stock does not jump in value.
A market order will also likely buy immediately, however, if the security should jump in value, more will be spent per share by the trader than he or she might be comfortable with (and a limit buy triggers a purchase only as the stock is below the limit price).
Using Stop-Limit and Trailing Stop Exchanges in Quick Trades
Another way to practice quick trades on volatile securities is to utilize stop-limit and trailing stop exchanges. These both allow buys to be set so that if securities reach desired levels, they will go through, and sales will be made when these orders specify the time to sell.
This means that, though checking in on securities every so often is necessary (so that a sell order can be set up once a buy has gone through), the market does not have to be constantly monitored, as it would when manually initiating buys or sells with market or immediate limit orders.
Day trading online at investment sites can be great success when securities are fluctuating adequately. Capitalizing on their volatile statuses can mean that correct quick trades lead to profit.