Act Like The Stock Market Professionals. Let’s start with day trading; day trading is the short-term, speculative trading in securities. Day trading is less aimed at beginners, but rather at experienced investors who want to achieve high returns in a short time with a comparatively low capital investment and at the same time are ready to take the equally high risks.
Stock exchange prices fluctuate within one trading day. Day traders try to exploit this volatility of the markets: The trader buys and sells securities within the period between the market opening and closing and speculates that the price on the stock exchange will rise or fall. The aim is to make a profit from short-term price fluctuations. Since price movements within a day can be comparatively small, buying and selling a share directly on the stock exchange would only promise limited profits on the capital employed. For this reason, day traders often speculate with derived securities – so-called derivatives. These replicate the price of an underlying asset, such as a share or an index. The name “to derivate” has its origin here: The securities are so called because they are based on a certain underlying asset.
The common derivatives for intraday trading at comdirect are:
- Leverage Certificates
- CFDs (high risk, only suitable for experienced traders) *
* Basically, all 3 classes are high risk. For this reason, comdirect customers have to submit what is known as forward business ability.
Financial instruments for day trading: trading with leverage
GOOD TO KNOW: With leverage certificates, warrants or CFDs, Without really needing to buy this basic asset, you will bet on the development of an underlying asset, such as a stock market index or a bond. The capital employed can be “leveraged” with the financial instrument. The leverage determines how much more the value of a derivative rises or falls compared to the base value.
Is day trading right for me?
If you want your capital to be spent in day-to-day business, you should be aware that as a day trader you should have advanced experience in securities trading as well as extensive knowledge of the processes of on-exchange and over-the-counter trading – day trading is not recommended for beginners in the stock market. If you are interested in day trading, in addition to the opportunities, you should also deal with the risks associated with the various options of day trading. Active risk and money management also helps you to avoid negative surprises when day trading as much as possible.
LEARN DAY TRADING
Learn how to take advantage of price fluctuations with day trading. We show you the dangers but also the advantages of this type of trading. Get to know different strategies and check whether day trading is right for you. With day trading, financial products are bought and sold on a trading day (“intraday”) in a very short time window – a trading session ranges from a few minutes to several hours. The advantage of this strategy: The investor can benefit from the short-term price fluctuations in the market to which securities are exposed when trading on the stock exchange. Day trading can make big profits possible, but the risk of loss is particularly high.
THE RISKS OF DAY TRADING
Day trading is quite a controversial topic. While short-term trading in stocks makes big profits possible, traders need to be aware that they are pursuing a risky and speculative strategy:
- The odds of winning come with an increased risk of losing money.
- If the underlying price develops differently than expected, in the case of a knock-out or useless expiry, there is a chance of complete depletion of the capital invested.
- When trading with contracts for difference (CFD) total losses are possible; however, private investors are no longer obliged to make additional payments, and losses are limited to the capital employed (account balance).
- The investor bears the risk of default of the respective issuer.
THE 3 MOST IMPORTANT ASPECTS OF DAY TRADING
Day trading places high demands on traders. You need a dependable broker on your side to have some hope of success. In day-trading, three factors are especially important:
Low fees: Costs can reduce the return on investment. This aspect is particularly important in day-to-day business because it often results in a very high number of trades with comparatively low price movements in the individual positions.
Products and services: The broker is your direct interface to the financial markets. As a service broker, comdirect offers a wide range of trading venues, high-quality products and functional, stable tools. If you have any questions or problems, specially trained customer advisors are available 24 hours a day, 7 days a week.
Speed of order execution: The quality of the trading systems is an important success factor in day trading. Short delays in placing and executing an order can have a significant impact on performance. First-class trading systems and convenient trading services such as session TAN or individual order templates make day trading at comdirect fast and efficient.