What is Weekly Trading with Binary Options? Where can I sign up for a best broker account to become a daily broker? Compare all the major brokers accepting day traders and find out which types of trades and assets are most profitable during the day.
Top Day Trading Brokers
What is day trading?
Day trading is a speculative trading method in which securities or derivatives are bought and sold on the same trading day. Positions are closed at the end of the trading day. It is based on forecasting the rise or fall of the price of a financial instrument. Day trading can take place in any market in the world, and is most commonly performed in foreign exchange (Forex), stocks, options and futures contracts.
Now we know what day trading is and who are day traders? Well, day trading was once an exclusive practice, reserved for those who consider themselves “professional speculators” or work for financial firms while classifying it as a profitable hobby.
However, today almost anyone can become a day trader.
The rise of electronic trading and margin trading software has made it available to individuals all over the world. So if this trading method is available to everyone, how do beginners get involved and binaries are a good starting point?
Chart
Charts, technical analysis and patterns are important tools for day traders. This chart shows the Bitcoin/USD exchange rate. This is a great market for day traders. There is a lot of volatility and action driven by news releases and trader sentiment.
Pick a market
The first step for a day trader is to decide which markets to trade with stocks/shares (Apple, Samsung, Tesla, etc.), indices (Hang Seng, FTSE, Nasdaq, S&P), forex and futures. . Commodities such as gold, oil or grain prices can also be traded. Cryptocurrencies like Bitcoin and ethereum are also huge markets for day traders right now.
The forex market is very popular among beginners due to its initial minimum deposit account of around £250. Binary options deposits can go much lower (from £10) but are traded without margin.
Futures require more, and stocks require the most money invested for day trading. Binary options are a low cost entry point for anyone looking to day trade. The downside, however, is the lack of leverage. Whether this is a factor or not depends on the trader. By leveraging increased market exposure, fixed price factors can actually help in terms of risk management, but limit potential gains.
equipment and software
Once you know your assets, you need the right equipment and software to start day trading as an individual day trader. As a beginner day trader, you need a fast and reliable computer. Computers don’t have to be top-notch, but they aren’t the cheapest. Day traders also need a fast internet connection. You want your tables and charts to update as quickly as possible.
Along with all this, you will need a trading platform and a broker to start trading. Traders will want something that is easy to use and uncomplicated right from the start. Traders are encouraged to use demo accounts associated with most day trading platforms to see which software platform performs best. If you go with a broker, make sure it is reputable and regulated, with low fees, tight spreads and bonuses.
Learning through virtual accounts is superior to books or courses. Hands-on experience introduces you to trading psychology (although it greatly increases with real money accounts). The same learning curve is difficult to achieve with “Duckies For Day Dummies” or hastily written pdf .
Market Hours
Another important aspect to consider before actually starting to trade is the time of day and how many hours per day you plan to trade. As a day trader, it is important to trade the same time each day to successfully implement and manage your strategy. The best trading hours are usually during market opening and closing times.
It offers exciting opportunities especially for Forex trading hours. Currencies are traded around the clock without a central market. This means multiple volume peaks and troughs as new regions wake up or exit. The London market may close, but the GBP/USD pair may still be dominated by traders from Indonesia, New Zealand or Hong Kong.
This time period cycle applies equally to cryptocurrencies. Daily transactions for Bitcoin or Bitcoin Cash will continue worldwide. Even lesser known digital currencies like Ethereum, Ripple or DASH are traded 24/7. Cryptocurrencies have added a whole new dimension to day traders.
Crisis management
Risk for this type of trading needs to be managed in two ways: trading risk and daily risk. Trading risk is how much you are willing to lose on each trade. The ideal standard is to risk no more than 1% of your tradable capital on each trade. Fixed risk in binary options helps with risk management as the amount you risk is known from the start.
Traders manage this by choosing an entry point and setting a stop loss. A stop loss will remove you from the trade when you reach a certain level of loss for that trade.
Daily risk is like trade risk in the simple fact that it limits the total amount of losses. Only your daily risk limits your total loss for the day. This will prevent a bad day from becoming too bad, and you’ll be able to recover with a typical triumphant day.
Pretext
There is no clear tax applicable to day trading. Different regions show different taxes and different binary options again. In the UK, for example, binaries are classified as “speculation” and income tax is not payable. However, in the US, Singapore and India the rules are very different.
Taxes also depend on whether you view day trading as a job or a hobby. Professionals may have their earnings taxed as ‘income’, but beginners may not. For this reason, it is important to seek local advice.
Binary day trading strategy
Day trading can be very complex and can be easily cleaned up with all the trending strategies and complex chart analysis. The thing to remember is that you don’t have to know everything. All it takes is to focus on one strategy and implement it over and over again. Try the strategy on a demo account to see how it goes.
Top 3 Day Trading Tips
- Always stay informed. Always look for opportunities!
Keep track of the latest stock market news and trends in the economy. Do your due diligence and research companies and the markets they serve. If supply is low and there are still enthusiastic buyers, prices can skyrocket. When there is too much supply and fewer buyers, the price is about to drop. Staying informed and knowledgeable about specific companies and their performance opens up massive opportunities for profitable daily trading. - Be a disciplined and consistent trader of work.
Set a reasonable trade size and manage your bank. The most successful day traders risk 1-2% of their trading capital per trade. Follow this rule consistently as if there is no other way. Trading similar assets at similar times provides a quick learning curve that allows you to intuitively better identify opportunities or mispricing. - Remain realistic and patient
If you find a proven trading strategy, stick to it. You don’t always have to win. In fact, most strategies only pay out 60-65%. So the key is to keep it up and stay informed about market news and the companies you bet on. It also takes patience to stick with your strategy. There are times when the market takes you on an emotional rollercoaster. It’s important not only to stick to your plan, but to make decisions based on logic and not emotion.
Momentum
One of the most used and well-known day trading strategies is the “momentum trading strategy”. This strategy relies on market volatility. Depending on the trend, you can use it along with other technical indicators and tools you can find on your trading platform.
That is, it is where traders analyze the market and look for the best performing assets over a period of time. This includes buying them and conversely selling underperforming assets. Being well informed and knowledgeable about current market moving news will help you succeed with this strategy.
News such as a company’s earnings, new deals or product launches, or any other kind of news related to the company can send prices skyrocketing. There are many facets to this strategy, and familiarize yourself with everything about it before implementing it on a day-to-day basis to fully appreciate its complexities. Even practice on a demo account to get to know yourself without risking your capital.
Day trading vs binary options
Some people consider “day trading” to be CFDs or spread betting. However, binary options are also suitable for intraday trading, if not for the better. Here is a breakdown of how binaries differ from traditional trading tools.
- Risk management . Binaries offer a fixed risk. Other tools require traders to make assumptions about the amount of volatility they face and judge risk. Binary’s fixed risk makes risk management easier.
- Payment . This is possible either way due to leverage, but binary options can provide returns of 90-95% on a single pip. Other trades may require a significant price move to move to profit and a larger move to show the same level of profit.
- Tax . Since binary profits are generally considered highly speculative trading, they are not liable for income tax. Daily trades in other vehicles may be considered ‘occupations’ and taxed accordingly. Again, this isn’t obvious, but binary options are generally more tax efficient.
- Entrance fee . Binaries are usually cheaper to start with. Similarly, increasing trade size with trade start and profit – much easier with binaries as the starting point is much lower.
Conclusion
So, what you really need in day trading is consistency with your trading hours and hours, a set risk level that you will follow and a strategy that works most of the time. Binary options can certainly be used within that framework. It’s important to complicate things and stick to a consistent plan in all aspects of day trading that excludes any emotional component that can sabotage trading.
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