Hello and welcome everybody to the Stock Fest blog. I was really excited when I found this on the Klat network and will be posting a lot of information here. Today, I wanted to start off this blog by talking about day trading and before we start I would encourage you to check out some of my postings on Investment Talk.

What is day trading? It is when an investor buys and sells a security within the same day. If you have been trading stocks for sometime, I guess your probably familiar with the Pattern Day Trader Rule. For those of you who do not know, it is when a trader buys and sells a financial instrument within the same day four or more times in a five-day period. However, holding a position overnight – an overnight trade – does not count in the definition.

Day traders are also required to have a margin account. This can be likened to a borrowing on collateral when looking at an example outside of the stock trading world. This is usually how traders usually leverage their trading capital. As for legal requirements of brokerage houses for day traders, there aren’t really any.

Day trading is really a speculative trading strategy, but day traders should have a methodology to stick to if they are to limit losses and maintain their profitability. Furthermore, day traders will have to close out all positions by the end of the trading day to ensure that they do not get exposed to fluctuations in the market price of a security.

Most day traders use sophisticated trading software and computer equipment to speedily analyze information and make investment decisions. Bulge bracket investment banks usually have the most complex equipment and resources to utilize day trading.

Day traders will usually make use of multiple techniques such as charting, technical analysis and fundamental analysis when performing their analysis of stocks. Range trading is a pretty simple technique to get started and involves trading securities that are volatile and have a predictable movement between highs and lows. Range traders look to profit from breakouts where the price of a security moves out of the normal price band that it has been trading at.

I know a lot of you reading this probably do not have the $25K that is required to put in a margin account to day trade, so I suggest you to check out forex which does not have all these requirements.