Millions of people involve in day trading every day and it has become like horse-racing now. Since a trader has only few hours of time to book his profit or loss, the day trading is too sensitive to play. Let me list out some secrets behind day trading.

1. Markets will react to each other:

World markets will react to each other every day. That means, if the U.S Markets fell yesterday night, as a chain reaction, the Asian Markets may also fall today, and vice versa. So, before your market opens, you have to check how the markets on the other side of the globe closed last night.

Though your Market indicators are good, always check what happened last night in the globe. You can check Yahoo Finance (http://finance.yahoo.com/) for global market updates.

2. Market bounces after every fall.

Suppose, if you buy a stock item today and it went down so worse, then don’t sell it by booking loss. If your stock is listed under BTST (Buy Today Sell Tomorrow) or ATST (Acquire Today and Sell Tomorrow) in BSE or NSE (India), then you can sell your stock the next day, instead of selling on the same day.

Because, there is a 80% chance that the fallen market may bounce on the very next day. In my personal experience, I noticed this bounces happening several time. So, don’t be in a hurry to escape from a falling market wait for one more day. Probably you will recover the losses or square off.

3. Beware of Stock Operators:

If you watch a stock is peaking or plunging very drastically, then avoid trading on the stock item. Because, there might be Stock Operators behind the stocks, hiking its price and bringing it down for their benefit. I have watched this is happening in BSE (India) very often. Some stocks hit the upper circuit (only-buyers state), and they suddenly hit lower circuit (only-sellers state) on the very next day. Avoid trading such stocks, since they are probably pushed up and pulled down by Stock Operators.

4. Short-sell at big Market Falls.

Usually, traders stay away at Market falls. Actually, it is the great time for Day Traders. If you are very sure that the Market will start falling throughout the trading session, then go for short selling. That is, in the morning, you sell your stocks (without actually holding them) and in the evening, you buy them. The difference is your profit.

5. Use very less % of your portfolio for Day Trading.

To say the truth, the market experts advise not to do Day Trading. Because, they leaned that there are always huge number of losers in Day trading than beneficiaries. Even, Portfolio Experts advise that 50% of your portfolio money should be allotted for long term investment. 25% of the money should be invested for short term. Rest, 25% money should go for very short term trading like Day Trading. Because, the risk in short term and day trading is higher than that of long term investment.

As far as my concern, I will suggest traders to stay away from Day Trading unless otherwise they have strong experience.

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