What is day trading?
Day trading is the act of buying and selling the same stock (or other investment type) within a single trading day.
This activity has become very popular among traders. It can be very profitable - you can make thousands of dollars in a very short amount of time. On the other hand, you can lose that money just as quickly.
Most stocks only fluctuate 1-2% every day. So if you put $1,000 into the stock and made a profit of 1%, that would only be $10. Now if you put $50,000 into the stock, you would make $500. That is where the danger lies, however. Let's say the company suddenly reported bad news or something major happened in the financial world and your stock drops 8%. You just lost eight times your normal profit of 1%, which would be $4,000 on a $50,000 investment.
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with our free Virtual Stock Exchange! |
Below is an example of a stock's chart towards the end of a trading day. You can see how different patterns emerge in the chart, even in just a few minutes. A day trader can make decisions based on these price movements.
Virtual Day Trading
Day trading can be fun and exciting but just remember that the risk of losing a lot of money in a short amount of time is quite possible. We recommend that you practice day trading with virtual money first, using a site like ours, to get a feel for what's possible. Then try out being a day trader in real life with a small amount of money.