Welcome to another episode of UpBots Academy!
In this article we will talk about day trading. Enjoy!
Day trading is a trading system where money is made by buying and selling an investment tool within one trading day.
Day trading is a trading style based on making money in the short term by making use of the volatility in any given asset and trading it within one trading day.
What are Day Trading Buy/Sell points based on?
The main source of action in day trading is the flow of news and psychological buying-selling points. However, this is a risky method of trading, simply because every investor in the market is trying to make a profit and take a position according to the news flow or technical analysis, the market is completely destroyed by the decision of early investors exiting all positions, in other words, profit realization.
So news-only day trading is likely to set you up for failure. Especially if there has been a move contrary to the market expectations. It is more likely that you will be in the danger zone of getting rekt as there may not be any more capital left to make a counter investment.
Day Trading Strategies
Day Trading also has different strategies within itself. Let’s talk about which strategies are used in day trading.
In day trading, 4 basic strategies are used such as scalping, range trading, news based trading, and high-frequency trading. In this article, we will talk about these concepts for beginners to understand better.
What is scalping?
Scalping is basically a system based on opening many positions and making small profits from each. Here the profit margins are quite small as a percentage. At the end of the day, when a trader sums up all profits and losses, then it might make sense if the trader’s win ratio is high.
What is Range Trading?
Range trading is a strategy that aims to determine the support and resistance points that show the psychological buying/selling levels of the traders in the market by using technical analysis, to use these points as buying/selling points and to profit from the difference.
What is NEWS-Based Trading?
The basic strategy here is a short-term (in fact, even under a minute) trade strategy based on the news flow.
For example, in the crypto market, it is a strategy that can be opened when a project announces an important partnership, announces a new exchange listing, and receives investment from a VC fund. In this method, you need to have a large coin/token follow-up list, as it is not possible for a project to have a new news feed every day.
What is High-Frequency Trading?
This strategy, on the other hand, is a method preferred by traders who use algorithmic trading, which is taking trades based on algorithms which aim to take advantage of all price increases and decreases, including the smallest arbitrage in the market, even if it is a cent worth.
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