You need to understand basic day trading terminology & concepts to build your foundation. You can follow me on Youtube to get free education! Join the community of thousands of followers on YouTube and begin studying the free content we post on a daily basis. This is the beginning of your education. You need to study the markets, analyze charts, and learn the strategies professional traders are using every day.
Take profits near the upper channel line. If the market is strong, you can wait for the channel line to be hit. If it's weak, grab your first profit while it's still there. What if a strong swing overshoots the channel line? An experienced trader may shift his tactics and hold a little longer, perhaps until the day when the market fails to make a new high. A beginning trader is better advised to take profits after the channel line has been hit as it's important to learn to take profits in accordance with one's trading plan.
Your account will be designated as “day trader status” if you have 3 round trip trades (one round trip = an opening and closing transaction), in a rolling 5 business day period. If you have 4 round trip trades in a 5 day period, you will be restricted from day trading for 90 days. Your brokerage firm will probably allow you to buy a stock and hold it overnight before closing the position. If you have a second day trade violation, your account will either be restricted from trading or you can request your account be a non day trader status account and buy and then sell after 3 business days. This depends upon the specific brokerage firms rules for some of these details but they are getting very strict with enforcing these rules.

A scalper intends to take as many small profits as possible, without letting them evaporate. This is the opposite of the "let your profits run" mindset, which attempts to optimize positive trading results by increasing the size of winning trades while letting others reverse. Scalping achieves results by increasing the number of winners and sacrificing the size of the wins. It's not uncommon for a trader with a longer time frame to achieve positive results by winning only half or even less of his or her trades – it's just that the wins are much bigger than the losses. A successful scalper, however, will have a much higher ratio of winning trades versus losing ones, while keeping profits roughly equal or slightly bigger than losses.


Even if you're a complete beginner in trading, you must have come across the term "scalping" at some point. Scalping in the foreign exchange market is a method of trading certain currencies based on real-time technical analysis. The main goal of scalping is to make a profit through purchasing or selling currencies by holding a position for a very short period of time, and closing it for a small profit. Without further ado, let's dive right in and see what one of the most popular Forex scalping strategies – the 1-minute Forex scalping strategy – has to offer.


For most students, once his or her accuracy has improved the next step is increasing positions sizes to maximize profits. If you’ve been trading at 65% success with 1:1 or 2:1 profit loss ratios for at least a couple of months you should be starting to feel pretty confident. Now it’s time to increase your position sizes. Since you’ve been working with a $100 max loss, you’ve probably rarely exceeded 2000 shares.

The second type of scalping is done by purchasing a large number of shares that are sold for a gain on a very small price movement. A trader of this style will enter into positions for several thousand shares and wait for a small move, which is usually measured in cents. Such an approach requires highly liquid stock to allow for entering and exiting 3,000 to 10,000 shares easily.
Scalping can appear easy because a scalper might make an entire day's profit within a few minutes. However, in reality, ​scalping can be quite challenging because there is very little room for error. If you do decide to try scalping, make sure that you do so by using a trading simulator, until you are consistently profitable and no longer make any beginning mistakes, such as not exiting your trades when they move against you.
Buying on margin can greatly increase your gains or losses. Brokerages usually allow a bigger margin percentage for a day trading account but reduce the amount of margin available for positions held overnight. Normally a day trading account must have a minimum of $25,000 and can buy on margin at a rate of 4 to 1 giving you $100,000 in buying power, which is called day trader buying power. That number drops to 2 to 1 for positions held overnight, which can be called overnight margin buying power. That means that if you have 100% of your margin being used during the day, you must exit at least half of your positions before the close of the trading day.
This strategy is mostly only done by day traders. It requires that you have access to one to several real-time news sources and can make split second decisions. News and rumors can provide large amounts of volatility and high emotion creating great opportunities if traded properly. The biggest challenge of trading this strategy is anticipating the market’s reaction to the news and how it effects the price of the stock. Click here for more information on trading news and rumors.
Market data is necessary for day traders to be competitive. A real-time data feed requires paying fees to the respective stock exchanges, usually combined with the broker's charges; these fees are usually very low compared to the other costs of trading. The fees may be waived for promotional purposes or for customers meeting a minimum monthly volume of trades. Even a moderately active day trader can expect to meet these requirements, making the basic data feed essentially "free". In addition to the raw market data, some traders purchase more advanced data feeds that include historical data and features such as scanning large numbers of stocks in the live market for unusual activity. Complicated analysis and charting software are other popular additions. These types of systems can cost from tens to hundreds of dollars per month to access.[19]
A pure scalper will make a number of trades each day — perhaps in the hundreds. A scalper will mostly utilize one-minute charts since the time frame is small, and he or she needs to see the setups as they shape up in as close to real time as possible. Supporting systems such as Direct Access Trading (DAT) and Level 2 quotations are essential for this type of trading. Automatic instant execution of orders is crucial to a scalper, so a direct-access broker is the preferred weapon of choice.

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Day trading is not for everyone and involves significant risks. Moreover, it requires an in-depth understanding of how the markets work and various strategies for profiting in the short term. While we remember the success stories of those who struck it rich as a day trader, remember that most do not—many will fizzle out and many will just barely stay afloat. Furthermore, don't underestimate the role that luck and good timing play—while skill is certainly an element, a rout of bad luck can sink even the most experienced day trader.

Scalping highly liquid instruments for off-the-floor day traders involves taking quick profits while minimizing risk (loss exposure).[14] It applies technical analysis concepts such as over/under-bought, support and resistance zones as well as trendline, trading channel to enter the market at key points and take quick profits from small moves. The basic idea of scalping is to exploit the inefficiency of the market when volatility increases and the trading range expands. Scalpers also use the "fade" technique. When stock values suddenly rise, they short sell securities that seem overvalued.[15]


The profit potential of day trading is perhaps one of the most debated and misunderstood topics on Wall Street. Internet day trading scams have lured amateurs by promising enormous returns in a short period. The idea that this kind of trading is a get-rich-quick scheme persists. Some people day trade without sufficient knowledge. But there are day traders who make a successful living despite—or perhaps because of—the risks.
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