The Big Book On Day Trading. Sunny Shah

Чтение книги онлайн.

      UNDERSTANDING THE TERM DAY TRADING

      Day trading (and trading in general) is the buying and selling of various financial instruments, such as futures, options, currencies, and stocks, with the goal of making a profit from the difference between the buying price and the selling price. Day trading differs slightly from other styles of trading in that positions are rarely (if ever) held overnight or when the market being traded is closed.

      Day trading was originally only available to financial companies (such as banks), because only they had access to the exchanges and market data. But with recent technology such as the Internet, individual traders now have direct access to the same exchanges and market data, and can make the same trades at very low cost.

      DIFFERENT STYLES OF DAY TRADING

      There are several different styles of day trading, suited to different day trader personalities. These styles range from short term trading such as scalping where positions are only held for a few seconds or minutes to longer term swing and position trading where a position may be held throughout the trading day. Most day trading systems have a lot of flexibility, and can have open positions for anywhere from a few minutes to a few hours, depending upon how the trade is doing (whether it is in profit). Some day traders will trade multiple styles, but most traders will choose a single style and only take that type of trade.

      Day trading consists of different types of trades such as trend trades, counter-trend trades, and ranging trades. Trend trades are trades in the direction of the current price movement (i.e. buying if the price is moving up), and counter-trend trades are trades against the direction of the current price movement (i.e. selling if the price is moving up). Ranging trades are trades that go back and forth between two prices, and are used when the market is moving sideways. Most day traders will choose a single type of trade, but some traders will take different types, and choose which one to trade depending upon the current condition of the market.

      In addition to the style and type of day trading, there are other variances between day traders. Some day traders like to make many trades throughout the trading day, while others prefer to wait for what they consider the best conditions for their trade, and perhaps only make one trade per day. However many trades are made, the trading process that is used, and the desired goal of making a profit, are the same.

      DIFFERENT TYPES OF MARKETS

      There are many different financial instruments, or markets, that can be day traded, and they are offered by various exchanges throughout the world. The main types of day trading markets are futures, options, currencies, commodities and stock markets. Within these types, there are groups of markets based on stock indexes (such as Bombay Stock Exchange, and the NSE), currency exchange rates (such as the Euro to US Dollar exchange rate), and commodities (such as gold, and oil). Day traders can have access to all of the exchanges and their markets via direct access brokers, so called because they offer direct access to the exchange, which provides faster trade execution at lower cost.

      SELECTING THE RIGHT MARKET

      Whichever markets you are trading, it is important to know what the market is based upon (e.g. stocks, currencies, or commodities), what the contract specifications are, and when the market is open for trading. This category profiles some of the most popular day trading markets in India, The National Stock Exchange (NSE), The Bombay Stock Exchange (BSE), and The Multi-Commodity Exchange (MCX).

      THE NATIONAL STOCK EXCHANGE OF INDIA (NSE)

      The NIFTY market is based upon the Nifty stock index, which is the primary stock index of the National Stock Exchange (NSE) in India. The Nifty stock index consists of fifty companies that represent the diversity of the stocks that are traded on the NSE. The Nifty stock index is calculated in real time, and the NIFTY futures market is traded on the NEAT electronic trading system from 9:00 AM to 3:30 PM Indian Time.

      The National Stock Exchange (NSE) is India’s leading stock exchange covering various cities and towns across the country. NSE was set up by leading institutions to provide a modern and fully automated screen-based trading system with national reach. The Exchange has brought about unparalleled transparency, speed & efficiency, safety and market integrity.

      NSE has played a catalytic role in reforming the Indian securities market in terms of microstructure, market practices and trading volumes. The market today uses state-of-art information technology to provide an efficient and transparent trading, clearing and settlement mechanism, and has witnessed several innovations in products & services viz. demutualisation of stock exchange governance, screen based trading, compression of settlement cycles, dematerialisation and electronic transfer of securities, securities lending and borrowing, professionalisation of trading members, fine-tuned risk management systems, emergence of clearing corporations to assume counterparty risks, market of debt and derivative instruments and intensive use of information technology.