OPTIONS TRANSACTION VIA DAY TRADING
Given so many concepts and terminologies in the foreign exchange market, anyone outside the field of finance may have a hard time coping up. However, behind the common words that usually encountered in Forex, are vocabularies that are more unfamiliar than the rest.
An example of this are day traders. To get started, let us first define day trading. Day trading is a method involving buying securities and selling them before the day closes. It is a short term trading strategy in which any financial instrument is allowed to be traded. This tutorial, aside from providing a brief introduction on day traders, will be tackling how to utilize this type of technique particularly for selling and purchasing options.
First, traders will purchase stocks, currencies, or futures in lower prices and exchange them when the market is in high mobility within the end of each day. By investing a large amount of capital, they are able to gain huge returns even with small price movements. The downside of this is had the prices shifted negatively, the loss of day traders will be quite hefty as well. Day traders may also hold their instruments for hours, or even seconds and can be employed in financial institutions or work for themselves by investing using their own funds.
Meanwhile, a trader that sells the same security over and over for four times within a five-day period are called pattern day traders. They are also subject to tighter limitations and margins as the SEC requires them to have a minimum balance of $25,000 in their brokerage accounts. In addition to this, pattern day traders are also required to account for at least six percent of trading activity in a given period.
In this sector of exchange, probably the best type to use would be Intra-scalp trading, although it poses high risks. It allows transactions to be made in a matter of seconds and exchanges are done using indicators such as oscillators and sequences.
Most day traders stick to a single trading style. Methods can range from trend trades which, as the name suggests, uses what is currently on top of the prices shift, counter trend trading, which is the exact opposite of the former as it targets commodities in a downward value, or range-bound trades, which aims for stocks that are constantly fluctuating in terms of costs.
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