What is Day Trading? A Day Traders Daily Grind

What is Day Trading?

A Day Traders’ Daily Grind

If day trading resembles the Wild West to the untrained or uneducated eye, then it makes sense that the practice’s practitioners are viewed as cowboys. Because so many well-meaning and nefarious sources paint a picture of day trading as being a “get rich quick” schematic, there’s a tendency to think of the strategy as a conduit for lawlessness, undisciplined behavior, and other forms of shady shenanigans. All one needs to do is take a long, hard look at the daily grind of a serious day trader to know this is a false representation. Authentic day trading is hard work that demands a lot of time and effort to be successful.

A Jam-Packed Day

The first thing that must be realized about a day trader’s daily grind is that it’s an all-day commitment. Successful day trading is simply not designed to allow traders to randomly pop in to enter a stock and exit it a couple of hours later. Its right structure demands the development of a strong, smart strategy whose parameters stretch out well before the opening bell.

The Work Before the Market Opens

Savvy day trading investors will get their day started a few hours before the market even opens at 9:30 AM Eastern time. This time frame is where studious day traders open newspapers, surf various reputable financial news websites or turn their TVs to financial-driven channels like Bloomberg or CNBC to get the latest news on any market-shaking or shifting events. The information ascertained from these sources are vital for shaping day traders’ plan of attack, from honing in on particular stocks to getting a bead on how the market may move during the day.

Day traders will also tap into resources like futures markets and broad market indexes to help them anticipate market or sector trends. They’ll also scour economic calendars to determine what financial reports are being released during the day, and whether or not they will have an impact on their potential targets.

After gathering sufficient data, day traders will sit down at their workstations and use various analytical programs and platforms to help them make heads or tails of the info. There are several layers to this process, from connecting with their trading platform to making sure all tech peripherals are working properly. This last component is especially critical – one lagging mouse could spell the difference between a good trade and a great trade for a day trader. Once everything is set up and ready to go, day traders will start scanning the markets for profitable trading opportunities. The ones that are determined to match pre-determined criteria are put on the day traders’ watch list.

When the Opening Bell Rings

Because the market tends to be extremely volatile during its first half-hour of operation, day traders usually play a game of “hurry up and wait.” In other words, they’ll hold off on acting on their morning’s research until the market calms down and settles into its groove.

Once the market settles, it all becomes a matter of paying close attention to the market’s every move, as savvy day traders will hone in on trading opportunities. Their research obviously drives Their focus, but it’s also dictated in part by their experience and their intuition. There’s no time for second-guessing or doubt to creep in during these times – a few seconds is all it takes for a winning trade to turn into a losing trade.

There are plenty of moves that day traders make in the first hours of the market. For instance, traders will often submit orders for profit targets and stop losses at the same time to protect themselves against adverse price moves. As early morning shifts into late morning, a lot of day traders will begin targeting potential reversal opportunities. Because the market tends to slow to a crawl at around lunchtime, day traders are usually hopeful that their positions will hit their profit targets before lunch.

Leading Up to the Closing Bell

When the markets pick up the pace after lunch, day traders will attempt to seek out extra trading opportunities before the markets shut down at 4:00 PM Eastern time. It also becomes a bit of a race for them to close any positions entered during the morning, so they aren’t left “holding the bag” with a potential overnight loss. As the closing bell approaches, day traders will close all of their open positions and cancel all of their unfulfilled orders. When the market shuts down for the day, day traders will either have a profit, loss or will have broken even. Whatever the outcome, savvy day traders will take whatever happens in stride. Even in the breakneck world of day trading, wealth is not built in a day. It’s still built up over time.

Post Market Work

The time after the closing bell sees day traders in workshop mode, analyzing what went right, what didn’t work, and what could have been done better during the session. This information is typically kept in a trading journal, which could provide critical information that can be used to refine and grow strategies when kept properly. It’s also not uncommon during this time for day traders to turn on the TV or hit various financial websites to get a recap of the day’s market events. This information could be used to help them start gearing up for the next day.

Not an Easy Task

It takes a lot of diligent work to be a successful day trader. Without sufficient research and a commitment to analyze the market and personal performance in the hours before and after the market’s opening and closing bell, day traders will find themselves on the fast track to financial devastation. And just like any form of market strategy, putting in the work still, doesn’t guarantee you’ll be hauling in profit at the end of the day. Still, those that can commit to the grind that proper day trading demands may find the practice to be an excellent way of maximizing profit and minimizing risk in the long run.

2 Comments

  1. Eqibeat October 4, 2016
  2. Braden Bills April 7, 2017

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