Day Trader - Intraday Speculator


The day trader or intraday speculator is defined as the person who operates in the stock market in the very short term, seeking to benefit from market movements and implicit volatilities that may exist in daily operations. To do this, the trader will base his decisions on technical analysis and fundamental analysis.

A day trader buys and sells on the same day. In this way, it tries to avoid the financing costs of the interbank market, as a consequence of the extra cost that means maintaining operations for more than one day or operations overnight in cash markets, which may undermine the expected profitability of your investment.

A spot market that has financing costs, for example, is the market Forex. This financing cost varies daily depending on the difference in interest rates of the currencies on which it is desired to operate, its price base being the interest rates imposed by the Central Banks of each country.

In this aspect, there are intermediaries, such as financial brokers of the type market maker, which take advantage of this situation by charging a differential to the client, generally associated with Euribor or Libor, called mark up, the cost of financing being much higher than the market cost. If we add to this that we also have to take into account the spread, that is, the difference between the purchase price and the sale price, where the broker will also put a surcharge or mark up with respect to the one you receive from your liquidity providers or liquidity provider.

In short, we can say that intraday trading becomes very difficult and that the one who does the most operations in a day does not earn more, but the one who knows when to enter the market, when to exit it, how to adjust their risk and how to cut a market. failed operation, in addition to adequate monetary management with reduced leverage and adequate mathematical logic between the volume of orders entered.

Types of day trader

Generally, there are two types of Day Trader (see types of trading):

  1. Scalper: the speculator seeks to profit from the movements of the stock market by operating constantly in a few seconds or minutes, here automatic investment systems, prop trading and high frequency trading would come into play. In this regard, there are many theories that say that it is not the way to make money in the stock market, since the people who make money in the stock market, which are not many, do it in the long term.
  2. Swing trader: It is a technique that is based on the fact that the trader carries out buying and selling operations but in a broader time frame, from operations every hour, to operations that can last in the market even several days.

Day trader routine

There are a number of daily methods that a Day Trader must follow. This text does not pretend to be the bible about how to have a daily routine when trading on the stock market, but it does pretend to give a series of guidelines in this regard:

  • First thing in the morning, starting at 7:00, we must do a series of exercises and stretches to prepare the mind and body for the psychological activity of investing in the stock market. We have to take into account that we are handling money and this can affect us. Sooner and later we will make mistakes, from these we will learn. No one is born knowing, error-proof and with perseverance we will achieve our goals.
  • Set a maximum stop loss, the possible strategy to follow, seeing the closings of the previous day in the technical term through the price charts.
  • Review the economic data and closings coming from Asia and Oceania (Japan, China, Australia) mainly, to see what the market sentiment is and how it can affect the European open at 9:00 in the morning.
  • Analyze the risk that exists in the opening, economic news that may affect the asset in question both at a microeconomic and macroeconomic level, data such as GDP, non-agricultural ADP, comments from the Fed or the ECB, possible changes in interest rates . We must reduce our exposure to the market at the time this news is published, if we do not have much experience, since the volatility that is generated is very large, we must control the mind and the famous fat finger.
  • Have the strategy clearly defined, analyze the correlations between the different assets, currencies, raw materials, indices, stocks, bonds, etc. We must know and quantify the risk of the operations, when to cut the bleeding in case of making a mistake in the operation, sometimes it is better to lose 100 euros than to lose 500 euros, control the leverage, have a favorable profit-risk ratio.
  • Attentive to the opening of the American market, being the largest market in the world and acting in a global context, its news affects the rest of the economies.

Tags:  right banking USA 

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