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Trading financial products on margin carries a high risk and is not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.

Trading financial products on margin carries a high degree of risk and is not suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your risk.

Your capital is at risk.

Stocks Trading

Trading stocks tips – online trading style guides

Day trading stocks image representation with a trader trading common stocks

There are many ways to trade stocks. You can take a long-term approach whereby you invest and hold the stocks for months or years. Alternatively, you can take a shorter-term approach whereby you buy and sell stocks over the course of hours, days or weeks. Those that choose to buy and sell on an hourly basis are doing something known as day trading stocks, and this guide explains exactly how this strategy works.

What is day trading stocks?

Day trading is the act of buying and selling financial instruments within a short period of time. That period of time is one day. Therefore, the aim of day traders is to make multiple transactions within a single day. In turn, this means something that’s stocks day trading won’t ever hold a position overnight. Once the market closes, all open positions are closed, and the new day brings another burst of activity.

How to choose stocks for day trading

Not all stocks are suitable for day trading. Naturally, given that every trading style has inherent risks, you can’t know for sure whether any stocks you choose will be suitable. However, certain stocks can be more suitable than others. The following points are what you should consider when it comes to stocks for day trading:

Stocks for day trading should be easily available. In other words, you want markets with high liquidity so you can buy and/or sell without delays.
The goal when you day trade stocks is to make multiple transactions in a short period of time. Low volatility markets won’t produce the necessary price changes to make this a viable strategy. Therefore, when you’re trying to choose a stock for day trading, make sure you look for markets with medium to high volatility.
It’s often a good idea to choose a stock that’s in the public eye. If there’s a lot of buzz surrounding a company, it creates liquidity and volatility that day traders can capitalise on. Therefore, when you’re choosing stocks for day trading, it can be a good idea to focus on companies being talked about by the media and/or social media.


Is day trading stocks right for you?

Stocks day trading isn’t for everyone. You can learn how to choose stocks for day trading, and you can understand the basics of this strategy. However, that doesn’t mean it’s the best trading style for you. To help you decide whether or not day trading stocks is right for your personality, here are some important points to consider:

Stocks day trading occurs over the course of a single session i.e. you only trade when the market is open. Making multiple trades each day and not holding positions overnight requires you to put a lot of time into this strategy. In essence, it’s a full-time job.
Making multiple trades each day requires a lot of skill and focus. Even small mistakes are magnified because you could be making the same mistakes 20 times in a day. Therefore, you need to maintain focus throughout the day so you can make the best decisions possible.
Can you cope with the swings of day trading? There will be multiple ups and downs every day. This can be stressful and, if you can’t handle the swings, you run the risk of making mistakes. Therefore, you need to be good at making decisions under pressure.
You need a certain amount of money to day trade stocks. The amount will depend on your personal circumstances.

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What skills do you need for day trading Stocks?

Having the personality, temperament and capital to day trade stocks is important. However, these fundamental qualities count for very little if you don’t have the skills to support them. Some of the key skills people day trading stocks need to have are:

  • Analytical Skills: Day traders use technical analysis and buy/sell signals to guide their decisions. This means you have to understand how charts work, know what certain signals mean, and be able to spot trends and patterns.

  • Awareness of Market Movements: Using charts, signals and technical analysis to predict market movements is important. However, you also have to look at other factors. This is where market knowledge and seeing what’s going on in the outside world becomes important. For example, a breaking news story might affect your stocks. If that’s the case, you have to react to this.

  • Timing and Logic: Timing something perfectly isn’t easy, but the job of a day trader is to be ahead of the curve. Getting ahead of the curve requires logic and composure. Every decision you make should be based on solid analysis and facts. Never act on emotion and impulse.

What Tools Do You Need to Day Trade Stock

What tools do you need to day trade stocks?

Okay, so you know what day trading stocks involves and you believe it’s the right strategy for you. Now you need some tools. Below are some resources that everyday stocks traders needs to have in their arsenal:

Limit Orders
You can set price limits for when to buy or sell. This allows you to trade with more precision and mitigate the risks.
Results Tracker
You need a way to record your results so you can see where you’re doing well and where you’re not.
Charting Tools
If you’re going to analyse the markets, you need a tool that creates charts.
Hot Keys
Having the ability to set hot keys is great if you’re a stocks day trader. Basically, you can assign certain actions to keys on your keyboard. This makes it possible to execute moves with a single tap.

Next step: start day trading stocks

Along with some of the most important tools you need to day trade stocks, it’s important to understand the financial markets in general. Our news and insights pages will help give you an idea of what’s happening in the financial world. You can also use our day trading software, including our CFD platforms, to get a complete handle on the markets.

You may also want to explore other options. For example, if day trading stocks isn’t for you, it might be worth checking out the more volatile cryptocurrency market. Finally, once you’re confident that day stocks trading is for you, use our sign-up link to invest in CFDs on a daily basis.

Not investment advice.