What Is Day Trading?

The journals and Web communities devoted to day trading attest to the obvious risks involved, though the popularity of day-trading continues. Here are some basics to help orient you to this chaotic

Day-Trading Strategies
Practiced day traders employ various tactics in order to maximize their profit in this volatile venture. Here are some of their techniques:

• Playing the spread. This is perhaps the most popular approach to day trading. A day trader will sell the stock at its asking price and buy at the bidding price. Since there is always a difference between these two numbers — a.k.a. the spread — the potential for profit, even a miniscule one, is great.
• Playing the news. When a day trader "plays the news," he buys or sells stocks from companies that have just released public announcements, have made the headlines, or have otherwise been in the news. Essentially, this trader will base his or her sales and purchases off of the latest newsworthy buzz and noteworthy publicity. If a company has just released a new and innovative product, buy before it peaks. If another company committed some public relations snafu, sell before it plummets.
• Counting on trends. On Wall Street and to a day trader, to follow a "trend" is to track those stocks whose rise or decline is steady, whose progress follows a trajectory. Stocks are bought and sold based on these movements, with the trader banking that the trend continues.
• Range trading. Range trading is similar to trading based on trends; in both scenarios, an understanding of a stock’s performance history is necessary. In this case, a trader follows stocks whose rise and fall fluctuates between certain ranges, stocks that rise on a support price and fall on a resistance price. Each time these stocks rise to a high, they will drop back to a low. Day traders will buy during the lows and sell again when the stock has hit its peak.