Stock Daytrading

Apr 16, 2009 in Stock Trading

Stock daytrading has fallen under a great deal of scrutiny over the past few years. It became popular back in the time of the technology stock bubble. The market had a great deal of volatility and stock prices moved greatly during the trading day. Traders saw an opportunity to profit from the volatility and took it.

In stock daytrading all trades are entered and exited all within the same trading day. No trades are held overnight. For some not holding trades overnight gave them a feeling of risk control. Overnight news of global events could drastically move stock prices before the next market open. This is great if the market moves in your favor, but not so great if you are on the wrong side of the market. Stock day traders are able to avoid overnight risks and they consequently miss out on overnight profit opportunities as well.

One factor to be aware of when daytrading stock is your transaction costs. With the increased frequency of trades in day trading come increased trading commissions. It’s always a good idea to factor your transaction costs into your calculations when deciding to use a daytrading system.