You’ve heard about day trading your favorite asset categories like stocks, indices, currencies, commodities and even crypto. However, it may be the first time that you could be hearing about day trading with contracts for difference or CFDs. The concept of day trading revolves on a very simple idea: traders need to open a position and close it within the same day. In a nutshell, it pertains to opening and closing a Buy or Sell position within the same day.
A CFD contract does not involve expiry times and dates but it has become an ideal avenue for traders to close positions within the same day that they were opened. Once a trade commences and is active, you can then close your positions any time manually.
It doesn’t have an expiry time that will cause the trade to close within the same trading day although you can use risk management tools like Take Profit or Stop Loss that will trigger the platform to automatically close them when the conditions you set are met. Remember though that some conditions are not guaranteed to be reached within the day. It could take days, months or even years depending on the market.
Over the last several years, day trading has become popular among investors because of the affordability of technology that allows it. Real-time prices can now be accessed over the Internet such as availability of free intra-day graphs, 10-minute bar charts, and the appeal of being emotionally and financially ready upon completion of a trade and just before another one commences.
The general assumption for day trading is that it is less risky when compared to traditional trading where contracts are bound to end for several days or weeks. Some can even go longer for a month. Intraday trading also eliminates overnight risks that can potentially shift prices against an open position. For a day trader, by definition, it exists only during the day.
Choosing the Right Broker
It is very important for traders to choose the right trading platforms. Most brokers use the MetaTrader white-label platform that have the classic apps for desktop, mobile or web. But that doesn’t mean that only those that offer MT4 or 5 platforms are the best choice. In fact, there are other great options out there that offer more interesting ways to trade. eToro is one of them and they are the pioneers in social trading where users can follow and copy the investment strategies of other users.
The eToro copy trading experience is a lot more engaging since it doesn’t involve the complexities of the usual day trading so you can simply choose the professional trader you’d like to copy and close it within the day if you choose to. It’s basically riding on their wisdom so whatever the result of their position is will be the same result of your copied position.
The bottom line is that there are a lot of ways now to trade and with the internet becoming more accessible to everyone, it’s now easier to go day trading via your PC or mobile device. You don’t even have to enter those stock trading floors in order to be a day trader. All you need is an internet connection and computer or smartphone and you’re good to go!