Day trading refers to the practice of entering and exiting positions in financial securities within the same trading session to benefit from short-term price movements. It is a high-risk, high-return approach that demands strong discipline, sound technical understanding, and effective risk management strategies.
Day trading is the practice of buying and selling financial instruments within the same trading day, aiming to profit from short-term price movements. Positions are opened and closed quickly—often within minutes or hours—but never carried overnight. Unlike long-term investing, day trading focuses on intraday market volatility.
Traders rely heavily on technical analysis, using charts, price patterns, and indicators to identify entry and exit points. Strategies such as scalping, momentum trading, and range trading are commonly used. Many day traders utilise leverage from brokers to enhance gains, though this also amplifies risk.
Risk management is crucial in day trading. Successful traders apply stop-loss orders and adhere to strict strategies to avoid emotional decisions. High trade volumes may result in notable transaction costs, which must be factored into profits.
Overall, day trading is a high-risk, fast-paced strategy that demands market expertise, constant monitoring, quick execution, and disciplined decision-making.
Here is a guide for day trading for beginners:
Before you start day trading, it is important to have a good understanding of how the stock market works. This includes understanding things like how stocks are priced, how to read a stock chart, and how to use fundamental analysis.
You will need to open a trading account with a trusted broker like Bajaj Financial Securities Limited (BFSL) in order to start day trading.
You can set up a demo account on many online platforms now-a-days. This is a practice account that allows you to trade with virtual money. This is a great way to learn how to trade without risking any real money.
Before you start day trading with real money, you need to develop a trading strategy. This is a plan that will help you make trading decisions. Your trading strategy should include things like your risk tolerance, your profit targets, and your stop-loss levels.
When you first start day trading, it is important to start small. This will help you minimise your risk. You can gradually increase your investment as you become more experienced.
Day trading should not be an easy way to make quick money. It takes time and effort to be successful. Don’t expect to make a lot of money overnight.
One of the most important things to remember when day trading is to manage your risk. This means setting stop-loss orders to limit your losses. It also means only risking a small percentage of your account on each trade.
Day trading can be very stressful. It is important to take breaks throughout the day to avoid making rash decisions.
It is important to stay disciplined when day trading. This means sticking to your trading plan and not letting your emotions get the best of you.
If you are struggling to be successful with day trading, there are many resources available to help you. You can find many websites and books that can teach you how to day trade.
Calculate your trading costs with the stock brokerage calculator.
There are several strategies that day trading beginners for trading stocks. Some of the top strategies include:
This strategy involves making numerous small trades throughout the day, aiming to profit from tiny price fluctuations. Scalpers focus on quick entries and exits to capture small gains, relying on high trading volumes and tight spreads.
Traders using this strategy identify and trade in the direction of the prevailing market trend. They enter long (buy) positions in uptrends and short (sell) positions in downtrends, aiming to ride the price momentum for a portion of the trend's movement.
Pivot points are calculated based on the previous day's high, low, and closing prices. Traders use these levels as potential support and resistance areas. They look for price reactions near pivot points to make trading decisions.
Momentum traders focus on assets with strong recent price movements, expecting the momentum to continue. They enter positions in the direction of the prevailing momentum, aiming to profit from short-term trends.
Range traders identify price ranges where an asset's price tends to oscillate between support and resistance levels. They buy near support and sell near resistance, profiting from price movements within the established r.ange.
Traders using this strategy capitalise on significant news events that can cause sudden price movements. They react quickly to news releases and economic indicators, attempting to profit from the ensuing volatility.
Arbitrage involves exploiting price discrepancies between different markets or exchanges for the same asset. Traders simultaneously buy and sell in different markets to profit from the price difference.
Here’s a guide to how to start trading for you, as a beginner:
Here is how you can day trade in stocks:
Here are explanations of some key terms you should know as a day trader:
The bid-ask spread is the difference between the highest price a buyer is willing to pay for a security (bid) and the lowest price a seller is willing to accept for it (ask). The bid-ask spread is an important factor to consider in day trading because it affects the profitability of trades.
A candlestick is a charting method used in technical analysis that displays the trading range of a security for a given period. Candlestick charts are commonly used in day trading because they make it easy to visualise and analyse price movements over time.
Leverage is the use of borrowed funds to amplify potential gains and losses in trading. Many day traders use leveraged instruments such as margin accounts to increase their buying power and take larger positions in the market.
A limit order is an order placed with a broker to buy or sell a security at a specific price. Limit orders are used by day traders to enter and exit the market at pre-determined prices and can help to mitigate risks associated with sudden price movements.
A long position is the purchase of a security with the expectation that it will increase in value. Day traders may take long positions in stocks, ETFs, or other assets that they believe are undervalued or have strong growth potential.
A short position is the sale of a security with the expectation that its value will decline. Day traders may take short positions in stocks, ETFs, or other assets that they believe are overvalued or have weak growth prospects.
A stop loss is an order placed with a broker to close out a position in the market at a pre-determined price to limit potential losses. Many day traders use stop losses to manage risk and protect their assets from sudden price movements.
Technical analysis is the study of historical price and volume data to identify patterns and trends in the market. Day traders often use technical analysis to help them make trading decisions and spot potential opportunities for profits.
Volume refers to the total number of shares or contracts that are traded for a particular security during a given period. High volume can indicate strong interest in a security, while low volume may suggest a lack of interest or liquidity.
A moving average is a technical indicator that smooths out price data by averaging it over a given period. Moving averages are commonly used in day trading to help identify trends and potential entry or exit points for trades.
Follow the below tips for risk management while day trading:
Day trading can be a bear fruits for beginners who are willing to put in the time and effort to learn the markets and develop their trading skills. The key to success in day trading is to have a solid trading plan, discipline, risk management strategies, and emotional control. Beginners should start with a small capital and position size and gradually increase their positions as they gain experience and confidence. With the right approach and mindset, beginners can achieve success in day trading.
Day trading is not illegal and is a legal practice in most countries, including the United States, the UK, and India, where traders buy and sell securities within the same day to profit from price fluctuations. However, it is heavily regulated to prevent market manipulation, and specific, high-risk practices like insider trading or spoofing are illegal.
Around 90% of day traders lose money primarily due to a lack of proper education, poor risk management, and emotional, undisciplined decision-making. The high failure rate is driven by overtrading, chasing quick profits, ignoring stop-loss orders, and the psychological inability to manage fear and greed.
Stock trading for beginners involves opening a Demat and trading account with a broker, funding it, researching stocks, and placing orders. Key steps include selecting a reputable broker, understanding market risks, managing investments with stop-loss orders, and continuously monitoring performance to build a diversified portfolio.
Day trading involves buying and selling securities within the same day, focusing on short-term price movements and closing all positions before the market closes to avoid overnight risk. Essential rules include strict risk management (risking <1-2% per trade), using stop-loss orders, relying on technical analysis, maintaining discipline, and starting with small, liquid stocks.
Yes, beginners can start day trading with caution. However, it's crucial to thoroughly educate oneself, start with small investments, practice with a demo account, and gradually increase exposure. Understanding risk management, market analysis, and maintaining discipline are essential for beginners venturing into day trading. It's advisable to start with modest expectations and continuously learn from experiences and mistakes.
Start by opening a trading account with a broker offering low fees and no minimum balance. Invest in affordable stocks or ETFs. Learn basic trading concepts, monitor markets, and avoid over-leveraging. Begin with a small, risk-managed approach and focus on education before attempting active or intraday trading.
Trading can be profitable, but it is not a guaranteed way to make money and is highly risky. While skilled traders can generate significant income, studies suggest that over 90–95% of individual traders lose money, especially in day trading. Success depends on rigorous discipline, robust risk management, and extensive knowledge.
Day trading involves buying and selling financial assets within the same trading day to profit from short-term price movements. Traders use technical analysis, charts, and market trends to make quick decisions, often relying on leverage and strict risk management strategies to maximise gains while minimising losses.
Yes, day trading is perfectly legal, but it is a highly regulated activity, particularly regarding margin accounts and, in the U.S., the Pattern Day Trader (PDT) rule. It is neither illegal nor unethical. In the U.S., FINRA rules require a minimum equity of $25,000 to execute four or more day trades within five business days.
A day trade involves buying and selling the same security (such as a stock) within the same trading day to profit from short-term price fluctuations. For example, if a trader buys 100 shares of NVIDIA (NVDA) at 9:30 a.m. for $150 and sells them at 3:30 p.m. for $155, they have completed a day trade with a $500 profit.
Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.
You can use the Bajaj Finserv App to:
Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.
