The Ultimate Daytrading Guide:

Invest Intelligently Step by Step And Earn Money With Stocks, CFD & Forex

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Opening Remarks

Basics

Basic information about the stock exchange

What is Daytrading?

The difference between trading and investing

What does a daytrader do?

Daytrading Strategies

What is traded?

Day trading in real time

What is a broker?

Strategies that really work

Scalping

Momentum Trading

Contra-trend trading

Pivot point trading

Automated trading

Trading Strategies For Beginners

What else needs to be considered?

Why is day trading so hard?

Chart Patterns and Indicators

What Beginners Have to Do Now

Successful Trading

A high-risk job

Daytrader as a profession?

Typical beginner mistakes

Step by step to a successful trading strategy

The Simple Rules

An art with clear rules

The Trading Plan

Trading is Business

What does success in trading really mean?

What is Postion Sizing?

How often should you trade?

Daytrading Advantages and Disadvantages at a Glance

Advantages

Drawbacks

Who is suitable as a day trader?

Money Management

Daytrading Psychology

Important Technical Terms

Closing Remarks

Opening Remarks

You want to know what daytrading is? Have you always been interested in this impressive world of the stock market? Then you should definitely read this guide. Day trading refers to short-term trading on the stock exchange. In this process, traders try to exploit the fluctuation margins of stock market prices. Many people think that as a day trader you are a gambler. They compare trading with betting and see the stock market as a kind of casino. However, this is a very big misbelief, because there is more to trading on the stock exchange than just gambling. Day traders are always on the lookout for profitable price fluctuations and try to profit from them. It is true that there is a lot of speculation about stocks, currencies or futures, but there is a lot of work behind these speculations.

As a day trader, you must be prepared to trade and trade every day in order to make a profit at the end of a week. For beginners, professional day trading is an elaborate procedure. A trading plan has to be created, a trading strategy has to be worked out and a lot of discipline has to be shown. Without patience and discipline you can achieve very little in this business. A day trader, unlike a normal trader, trades in a very short time. They open positions and a few minutes or hours later they close these positions again. Sometimes it may even take a few seconds.

Sounds like an exciting business? It is! Price developments play the most important role in day trading. However, these price developments can also be very susceptible. If, for example, negative news is published, this can have a strong influence on price developments. You already notice that as a day trader you are exposed to a very high risk of loss. For this reason, you are probably wondering whether day trading is a real profession at all.

Just in advance: It can be regarded as a real profession! But why is neither training nor study necessary for day trading? Why does the profession of a day trader expect so much knowledge, but no professional qualification? What makes this hobby, the profession or also the pastime so interesting and how can you start with it if you don't know anything about the whole topic? These and many other questions are answered in this guide for beginners.

Basics

In order to survive on the stock market, it is important to learn some basics. Many beginners jump at daytrading       indas

without preparing well beforehand. Unfortunately these are not very successful. The following chapter is important for your success.

Basic information about the stock exchange

The stock market trades in stocks, commodities such as gold and silver, bonds and interest rates. The prices on the stock exchange vary very strongly, so that there are no fixed prices in advance. But who can buy on the stock exchange? Anyone can participate on the stock exchange as a buyer or seller. Anyone can therefore participate in exchange trading, usually by electronic means. Whereas shares used to be delivered in physical form, nowadays they are only traded virtually. To ensure that everything is fair and transparent, there are fixed rules and companies that monitor transactions on the stock exchange. Basically, the stock exchange is nothing more than a market in which offers to buy and sell are brought together and settled via third parties.

For the ignorant, stocks are a kind of lottery. If you are lucky, you will immediately win the main prize. If there's a bit of bad luck in the game, you can lose everything very quickly. But for the knowledgeable, the stock market is definitely not a game of chance. There is more to stock trading than the ignorant think. If someone buys a share, he theoretically becomes an entrepreneur. A share is a share in a company. Whoever buys a share in a company becomes a co-owner of the company, so he owns a small piece of the big cake. So he owns a bit of the factory site, a fraction of the machines and even some of the goods produced. A share certifies the value of this company share, which is why it is also called a security.

But how can one share earn money? If the company - from which you bought shares - is doing well, the shareholder gets a share of the earnings. The shareholder thus participates in the success of the company. Accordingly, the co-owner receives a portion of the profit generated once a year - a dividend. If the company is doing better and better from an economic point of view, the shares of the companies also become more sought-after, so that the price of the shares of the company rises.

Of course you also have to consider the bad times. Of course, if the company's business is going worse, the shareholder will also notice. If the winnings fall, the payout may also be reduced. If the company even makes a loss, the shares in the company tend to be an unpopular investment. Conversely, the share price falls.

As you can see, the stock market has little in common with a lottery. So the shareholder is on the same roller coaster as the company and experiences the economic ups and downs at every moment. Of course, the shareholder also has some rights. For example, he may attend the Annual General Meeting once a year and decide together with the shareholder what the next step is. They can also criticise the management of the company and help decide how much should be paid out as a dividend.

How much money does the shareholder have to spend? In principle, a single share is enough to become a shareholder. He can therefore have a say even with a very small sum of money. Sounds pretty simple, doesn't it? For many people, the stock market may be quite a mess, but it is not. Imagine a market. You will see fresh fruit and vegetables offered for sale. Normally a price tag is attached to each product, but it is possible to trade on such a market. When people are slowly on their way home and the traders have to get rid of their products because they may not be able to eat them the next day, the traders may sell the fruit and vegetables at a cheaper price. That's the typical market, but that's how the stock market ticks. The price is determined on the basis of available supply and corresponding demand. However, the people who trade on the stock exchange buy less fruit and more stocks, commodities, bonds, food such as sugar and coffee or even electricity.

On the financial markets, the settlements are carried out by traders, who must comply with rules which are subject to strict supervision by the German authority and other special authorities. These authorities simply want to rule out the possibility that fraudsters may cause major damage. The stock market is seldom about food, and it is mostly about shares in valuable companies with jobs and social responsibility.

Nowadays shares are not really present or tangible. This means: Securities only change their owner virtually. Many things are settled digitally and electronically, so that a security changes from one securities account to another. The purchase price is therefore debited from one account and credited to the other account. On the stock exchange, many things happen only electronically. In the past, shareholders had the items delivered to them; today, the shares of all shareholders within a company are collected and recorded in a single collective certificate. This document is then stored at a neutral location, the securities collection point.

All transactions now run only on the computer. Even the share prices are transmitted electronically. The direct contact between buyer and seller no longer takes place. In Germany, however, there are still a few stock exchanges where the brokers can be found directly on the spot, but this system will lose importance over time and ultimately be driven out of the stock exchange.

What is Daytrading?

Day trading refers to the buying and selling of financial instruments within a day. This is the name given to stock exchange transactions on a single day. If various positions are opened or bought and closed or sold again in just a few hours, minutes or even seconds, this process is called day trading. The people who try to make profits with quick buys and sales and small price changes are called day traders. The day trader is therefore in the sense of the investor. Another word for ultrashort trading in the time of a few hours, minutes or seconds is called scalping.

Now you're probably asking yourself a very important question. You are certainly wondering why it is so important for a day trader to sell bought positions on the same day? The whole spectacle serves a special purpose: the day traders want to prevent price differences that are difficult to calculate, so-called gaps. These price gaps arise precisely when the positions are held during the night.

Day trading is usually conducted with highly valued derivative financial products. For example, in the form of CFD and Forex trading. CFD trading is referred to as a derivative. The derivative security is a security whose value, or rather whose performance depends on the performance of one or more underlyings. You can imagine it something like this: A derivative is like a betting slip. You speculate on a future price and make profits if you have correctly assessed and analysed the situation. If you bet, for example, that the price will rise rapidly in the next few hours and exactly the opposite is true, then you may lose a lot of money.

Forex trading has certainly been done by every one of you before. Anyone who has ever had to exchange money because a different currency exists in the holiday country has already come into contact with Forex trading. The Forex market is also known as the currency and foreign exchange market.

So how are profits generated by day trading with derivative financial products? In the form of CFD and Forex trading, you can make enormous profits with minimal price differences. However, one must also bear in mind that equally high losses can occur. Daytraders try to keep up to date daily. Thanks to the latest news and technical chart analyses, many future price developments can be assumed.

Who doesn't want to earn a lot of money quickly? That's the tempting thing about day trading. But not only that attracts many people to day trading. People who are looking for a certain thrill or risk are also attracted to day trading. It's a stark contrast to long-term trading in securities. Day trading does not involve investing in stocks that are retained for many years. But especially newcomers to the stock market should be cautious when it comes to day trading. With this principle one can suffer very high losses in addition to the high profits.

This type of investment is and remains very risky, because the principle must be understood and only experienced investors who can assess certain risks well can do so. The psyche can also be affected by day trading over time, as important decisions regarding investments have to be made frequently and within the shortest possible time. Of course, wrong decisions also have to be taken sometimes. To become a good daytrader you need a lot of experience, knowledge, nerve strength and stamina. This is the only way to earn good money in the long run.

Day trading offers the possibility of profiting from both rising and falling prices. If you buy a stock in order to sell it again at a higher price in the future, then you have taken a "long" position. So you benefit when the price rises. By contrast, day trading also has a "short" position. Logically, the day trader makes a profit when the price falls. In theory, this variant is a loan transaction, as the sale of a security took place before the acquisition. Accordingly, the day trader borrows a share and sells it again in the same breath. If the price falls, the day trader can even buy it back at a lower price. The difference is then of course simply booked as profit.

Many beginners invest too little time in this really complicated matter. Most beginners get an account with a broker, transfer a little money and click around a little in various platforms. If the first trades were sent without really thinking about it and questioning the individual facts, the money may be quickly gone again. The next point is that with such a small amount no reasonable risk management is possible, but this should be one of the most important points for a day trader. Usually the deposited money is then quickly gone, the beginner throws everything away again and in the end goes home again as a loser.

The fact is that day trading offers oversized profit opportunities, but the risks are also significantly higher. With a conventional investment you would of course have a lower risk. Anyone who sees day trading as an opportunity to get rich quickly and effortlessly in a short period of time will no longer trade in the near future, but rather start playing poker. That this principle will drive you to ruin is hopefully clear to you. So daytrading can be a job like any other. Even if you were able to get the first information and acquire knowledge, it will take a while to really understand how this business works in the long run. With a little patience and ambition, everyone can learn and understand day trading one day.

The difference between trading and investing

If one looks at the differences between trading and investment, one immediately notices that the two positions diverge in several aspects. In order to communicate the differences clearly, you should ask yourself whether you know a famous investor. Many people who have been involved in various stock market transactions for some time will certainly answer this question with "YES". A big investor you probably know at least from hearing is Warren Buffet. He is THE investor role model and one of the richest people in the world. As a teenager he started to invest his money in shares - with success. His good intuition helped him to buy cheap shares and to sell them afterwards at a high price. Warren Buffet has set up a few rules for this very simple principle, which you should always follow if you want to invest successfully.

The first rule is never lose money.

Another one: Always remember the first rule. And the third rule is: You should only invest in companies whose activities you know and understand.

Another famous investor is George Soros. He is known as a hedge fund guru and has the best track record of any investment fund in the world. He finds financial markets chaotic. Accordingly, he thinks that most people tend to make emotional decisions. The relationship between stock prices, bond prices and currency prices with the people who trade in the securities, i.e. buy and sell, is therefore important. Rational and logical calculations, on the other hand, tend to be of secondary importance, since the emotional reactions of people are the basic determinants. Opportunities arise with him through a thorough investigation of the companies. The prevailing prejudices of investors influence market transactions, which in turn affect the economy.

You have now met two well-known investors. But can you also name a known trader? There are successful traders, but they are by no means famous. Someone who is a bit more involved with daytrading, of course, knows a few names from this scene. But ask the ignorant if they know a famous trader. To get to the bottom of this, you should know some basic differences between trading and investing.

First you should know the respective definition of the words. Investment means the long-term storage of financial resources (i.e. money) in tangible and intangible assets. We're talking about a bond here. Trading, on the other hand, means nothing other than trading. If you want to take a closer look, you should look for the term daytrading.

Day trading involves trading in securities. This works on a short-term and speculative basis. Within one day, various positions are opened and then closed again. The aim is therefore to profit from price fluctuations. The objects that are considered in more detail in this trade: Equities, foreign exchange and derivatives. In addition to day traders, swingtraders are also active on the stock exchange. They keep different positions for several days or even weeks. Time plays a very important role in this case.

Another difference between investing and trading is the time perspective. While investing is more about a long-term commitment, as a trader you are more interested in short-term positions. When trading, the ownership period can last from a few seconds to a week. Investors are more likely to have a half-yearly commitment in mind.

The fundamental aspect also plays a major role in investing. For this purpose, analyses of corporate balance sheets are often used to generate investment ideas. Once you have thought about the situation for a while, you decide after careful consideration whether you want to invest in something or not. In order to make a decision and find a suitable entry, however, the chart technique can also be used.

When trading again the temporal classification is decisive. The trader, who sometimes only holds various positions for a few seconds or minutes, cannot do much with a fundamental analysis. The trader uses this type of analysis at most to get a rough overview.

Traders only trade stocks with a high fluctuation intensity. For this reason, they can earn considerable sums in a short time. This is why traders prefer to use derivatives to generate a lot of profit with a small amount of capital invested. At this point, you rather pay a price in the form of time value, financing costs and specified term.

Investors usually trade in a pure underlying asset, such as a share. Investors normally have large assets. If, for example, they invest 6 million in a share, they can collect a reasonable amount despite a small return. When investing, the portfolio partly also consists of several investments, so that here too derivatives can be used from time to time. Among other things, this has speculative intentions.

So there are differences between investing and trading. However, the borders usually seem a little spongy. Fact is: If you want to make a lot of money as a trader and reap success, you should get a hard coat. He should always have his emotions under control so that ill-considered mistakes can be avoided. The investor has it much easier at this point. But even he must not lose his patience.

What does a daytrader do?

Have you ever dreamed of getting rich overnight? I'm sure we all want that. There are some online platforms for day traders, or for investors who want to try to make even more money out of their money. Of course, this should also happen in a short period of time. Who wants to spend a lot of time when life is limited in time? So in a short time, if possible, a lot of money should be earned.

There are enough platforms that use convincing slogans to convince people that they can learn to trade in a quarter of an hour. The perfectly elaborated concepts should be suitable even for beginners. Many people complain about the banks, which apparently orient themselves too short-term, complain about the bankers, who would allegedly collect too many bonuses, but have nothing against themselves. However, most people are not critical of themselves at all. Some people invest their money with a foreign bank so that they earn one percentage point more in interest.

Others like to gamble themselves and overestimate themselves in a certain moment, so that with a little bad luck they lose all their money. More and more people dream of fast money. The number of Germans who trade in shares is rising and rising. Above all, the number of those who act at short notice is also increasing. Currently, the number of users of online platforms is up to 70,000. These people all trade currencies in the short term and speculate on the best trades.

Through the online platforms, however, it is also possible for everyone to inform themselves and act like real professionals. Every private investor has the opportunity to open his own small trading room and trade speculatively.

At that time, people still kept files, continued their lives normally and later admired their savings. At the time, investors were keen to steadily increase their savings. Nowadays the fast business plays a more important role. A fast trade should bring accordingly fast money. The very eager day traders then come up to 200 orders a month. Investors accuse the banks of greed, but why then do more and more investors fall for fast trading in securities? Is the urge for fast money so great?

Day traders open positions on the stock exchange, which they liquidate again at the end of the day at the latest. The goal of a day trader is to make profits from small price movements. This process is also known as scalping. The day trader must therefore wait for the decisive moment by noticing short-term changes and getting out as soon as possible. In order to recognize the decisive changes, he uses the chart technique. A cutting spread can also be formed to achieve profits. A spread is the trading margin between the redemption price and the selling price. It should also be noted that day trading is usually only worthwhile in markets with a high degree of volatility.

Whoever chooses the profession of day trader has the possibility of a high income with free time management. A person who practices the profession of a day trader is often highly regarded in society. The violence and power with which he has multiplied his capital within a very short time leaves a lasting impression on his fellow human beings. However, the execution of the job is also extremely risky. This is because potential high profits are offset by a high-risk loss potential. This can be very bad for a daytrader in some cases. Daytraders should start slowly and not think that by trading they become superhumans. Most people simply assume that if they enjoyed a good education and currently have a good income, their previous career can be transferred 1:1 to day trading. Most daytraders are unfortunately disappointed afterwards. If you want to trade on the stock exchange, you have to play by the rules. These rules have to be learned before you can strive for a successful career as a daytrader. You already know that daytrading usually entails considerable risks and a strong psychological strain. The most important rule for a prospective daytrader, however, is the small introduction. The motto is to start small and gain experience from time to time. Beginners who take their previous successes and large account from another business with them into their new daytrader career must be prepared for significant financial risks. Because one fact should be clear to you: Most beginners lose all their capital! So anyone who is new to this profession should therefore equip themselves with less capital, gather experience and gradually increase the capital invested.

In the profession of day trader, as in all other professions, there is also no shortcut to earn a lot of money. The first successes need time, also some losses must be plugged in. If you don't follow these simple rules, you shouldn't be surprised that you put all your capital to work for nothing.

How does one become successful as a day trader? If you want to be a daytrader, you have to be able to recognize your mistakes. For this reason, the profession is totally difficult to assess for many career changers. They don't know how it works because they haven't made any mistakes yet. Those who have not kept a diary about their trading behavior cannot recognize their failures and logically do not really learn anything from them. Only by recognizing the wrong decisions in trading it is possible to understand and learn the profession of a day trader. Once the profession has been understood and the mistakes have been made, more and more profits can be made over time.

If you have everything under control in the economy and are celebrating success, this does not mean, however, that you would react correctly on the stock market with shares. Stock trading is completely different. The emotions of a day trader also play a very important role in this business. They must therefore be controlled and kept under control. However, not all mistakes can be prevented. For this reason, it is important to use a trading system in order to be able to absorb these losses from weaker times without any problems. The money saved will not be destroyed unnecessarily.

Through the social media and the constant advertising on the Internet or on television, one is constantly preached that one can achieve large profits in the shortest time with Daytrading. Daytraders who have been in this business for years may well be. However, the profession of a day trader is anything but easy for a normal beginner. Normally, you should assume that you will make rather small profits at the beginning. Once they have recognized their mistakes after a few months and created their personal techniques, you have a good chance of successfully practicing the profession.

What does a daytrader make? I'm sure you've been asking yourself that question all along. The earning chances of a daytrader are extremely high. If the capital is doubled per year, an average income of approximately 70,000 euros per month can be achieved. Of course this is always up to the daytrader himself, how much he is willing to risk and how much profit he makes per month. For a day trader a profit of 15% per month should not be a problem at all. If you control your emotions even on bad days and you have the intention to increase your money enormously, then the profession of a day trader is just right for you. A great profession that takes time, patience and a lot of diligence.

Daytrading Strategies

Now we finally come to the strategies! There are many strategies that daytraders can use, but in order for you to be able to use the right strategies, I recommend that you think through all the strategies well. Not every strategy works for every day trader.

What is traded?

Day trading is trading. It is therefore a trading strategy in which a position is opened at the beginning of the day and closed again within a trading day. Day trading is therefore not about holding long-term positions, but rather about analysing and exploiting short-term fluctuations on the stock market. Securities are traded mainly, but forex, i.e. trading currencies, is also very popular with many day traders.

A day trader is deliberately looking for very liquid securities that are highly volatile in order to profit at the right time. Interesting here are stocks which, due to news or various events, have large price gaps before the stock market opens, the so-called Momentum stocks.

In the case of a simple share, there are usually no major fluctuations on a single day, so trading is hardly worthwhile here. Day traders therefore often trade in financial instruments derived from underlying assets, the derivatives. The underlying assets can be equities, interest rates, commodities, currency pairs or money market instruments. Accordingly, it is estimated that the underlying will change in a certain direction. Either he rises or he falls. The derivatives most frequently used are leverage certificates, futures, CFDs, warrants, binary options and forex trading.

The daytrader uses a small part of his money. Approximately as much as the underlying asset would actually cost. The leverage effect can now be used when buying derivatives. The leverage reflects the ratio of how the price of the derivative has changed in relation to the underlying instrument. With this leverage it is possible to achieve high profits with low capital investment. Of course, the leverage effect can also have a negative effect, resulting in high losses.

Which factors actually influence share prices? Shares are traded at certain prices. In Germany, shares are denominated in euros and US shares in US dollars. On some days equities rise and on other days prices fall. One can compare the course of the prices with the domestic gasoline prices. These fluctuate also very strongly on a day. But why is that? Why do stock prices rise drastically and why do they then drop again abruptly? The strong influence of supply and demand on prices plays an important role here.

If many investors want to invest in a stock, demand rises and the price rises drastically. If a corresponding number of shares are sold again at once, the share price will logically also fall. However, the essential actor is not the demand, but the trader. If investors expect prices to rise, many people are likely to want to invest. In this case, of course, the price climbs upwards. But if investors assume that the price will fall, some people will certainly sell their securities. Then, of course, the stock price drops. Which other factors are decisive? Of course, the economic situation plays a big role on stock prices. At that time, for example, the major financial crisis caused share prices to fall to rock bottom.

The outlook for the economy was negative, with many companies generating less turnover and therefore only a small profit. If the prospects are positive, this will have a not negligible impact on investors, who will speculate accordingly with higher sales and higher profits. If the company also makes an unexpected profit, one can observe a rise in the share price. But it is not only the economy that plays a major role in share prices; the political situation, whether at home or abroad, also has an influence on various developments. For example, the attack of the terrorist organization "Al Qaeda" in the United States led to a crisis that affected the entire world. Worldwide instability spread and caused countless share prices to collapse.

Another factor is the psyche. Psychological factors must not be underestimated in this day and age. The factors of fear and uncertainty in particular often cause share prices to plummet. If the investor is afraid that the company in which he has invested will make losses, then he is very likely to sell his share before it has even plummeted. In such cases the so-called panic sales break out. As a result, the share price falls, investors sell their securities and, in the worst case, the price falls even further, so that even more investors sell their shares. Rumours, announcements and other news also influence share prices.

Day trading in real time

Day trading usually does not involve trading in physical financial instruments. The purchased shares are booked directly online and sold again at the perfect moment. Real-time trading is therefore particularly effective in speculating with derivatives. This means that the securities purchased are booked directly into a securities account in real time, so that they are available anytime and anywhere. Depending on how the price develops, speculation can be made and a decision made accordingly as to whether the securities should be sold again as quickly as possible. In order to have the best overview, special software is usually used. This software is issued by the broker. The software should be up to date and guarantee a complete and perfect synchronisation of the share prices with the current values on the stock exchange. If the share price development is transmitted seamlessly, you can follow the developments on the stock exchange without delay. If all values are always up to date, you can react accordingly.

This model works particularly well in derivatives trading. With the fast bets on price gains or price losses, some risks cannot be ruled out. Meanwhile, there are countless platforms of brokers who offer a free demo account. In addition to the free account, there is a small starting value, which is first deposited into a normal deposit account. This starting value can of course be completely lost at very high risk.

But there are also advantages in speculating with derivatives. A big advantage is that you can achieve relatively high profits even with small stakes. To achieve this, you should first practice on a demo account. Especially for newcomers, this is a good opportunity to get to grips with this complex topic and to get to know the usual steps in retailing. However, beginners should not only pay close attention to the individual functions, the various markets also play an important role in general. Someone speculating should accordingly be able to assess the gains and losses that may arise in individual markets, as fast speculation in securities is associated with high risks.