If you are interested in being a successful day trader, you will need to have a variety of day trading strategies on hand to maximize your profits while minimizing your work load. You will be buying and selling stocks on the same day rather than holding them for any length of time. For this type of trading, you will make the most money by utilizing a variety of strategies. For the best of these types of strategies, read on below.
leveraging: This is a classic in the day trading strategies tool box. In the most simple terms, leveraging means that you borrow money to make more money. For example, if you have a certain amount of money to purchase stocks, you will only be able to purchase a certain amount of stock. However, if you borrow a sum of money that is double your original amount of money that you have in your account, then you have double the purchasing power as well as the potential of making double the money.
Selling short – this is also considered a classic move in day trading strategies tool box. This involves buying those stocks that are decreasing in price. The day trader will have to contact the broker to inform them that they want to borrow the stocks instead of purchasing them. When the prices of the stocks decrease, the day trader will then purchase the shares of stock and use the difference of the amount in order to pay the broker back.
Both of these day trading strategies are risky. For example, the stocks may drop so low in value that the day trader is asked to pay back the money right then rather than waiting for the agreed upon time frame. This is called a margin call. It can also result in the day trader having to deposit even more money in their personal account in order to cover these loans.
In order to protect yourself as a day trader it is important to use day trader strategies such as a stop loss in which the day trader buys a stock when it comes up to an agreed upon price.
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