Day trading can be done in any market so long as you have direct and immediate access to current market bid and offer
prices and the market has sufficient liquidity to absorb your transaction whenever you need to transact. Direct and
immediate access to market prices has now become commonplace thanks to the development of the internet and online or electronic trading
platforms provided by brokers. Whereas, in the old days, such access was typically restricted to those exchange members who
stood all day in the designated trading pit, the retail trader of today can day trade on their computer from the comfort
of their home or office.
There are several markets that have sufficient liquidity for day trading. These include stocks of highly capitalized companies, the major foreign currency
pairs, and even some commodity futures contracts. With regard to the latter, the E-mini® S&P 500® futures is
the dominant contract for day trading, though crude oil futures, Treasury bond and note futures and even some grains
such as corn futures have a regular presence of active day traders.
Day trading means that all contracts whether bought or sold are closed on the same trading day as they were established. Note that
the trading day is defined by the exchange and may actually start the evening before. Consequently, a day trader may open a
position in the evening and close it the following afternoon with all of this still occurring on the same trading day.
Day trading, because it spans such a short time horizon, is done in order to capture brief price movements. Day traders hope to
place a trade and profit from a sudden rally or drop
in price following the public broadcast of a news event or the release of an economic statistic.
Such fundamental factors do not occur often during a typical trading day so many day traders rely on technical analysis
to identify and hopefully profit from short-term market momentum. Momentum refers to the tendency of prices to continue
moving in the same direction and presents profit opportunity for the day trader.
For more information on day trading forex, please see our specialty site, How to Trade Currencies
and for more information on day trading futures, please see our specialty site, Day Trading Futures.
Recently, a market innovation has appeared that provides another way to day trade and that is online binary options.
Binary options trading is available on most foreign currency pairs, select stocks and indices and a few commodities.
These options expire in one hour, have fixed and known risk and payout and trading can be done for as little as $50.
For more information, please see How to Trade Binary Options
Day Trading Books...