4 Tips To Becoming A Successful Day Trader by Abhishek Agarwal

1. You should be familiar with liquidity.


Liquidity is the existence of sellers and buyers in large amount over specific stocks that permits a fellow trader to quickly gain a position or willingly exits the stock.

Liquidity is based on many important factors such as number of market makers, number of shares, volumes and ownership breadth.

Liquidity requires fast execution from a trader within predictable price range.

In addition, you should keep an eye out for high-liquidity.

High-liquidity gives an additional advantage of reducing the popularity of a bid-ask for a certain stock which results in reduced execution of the cost for a day trader.



2. One of the factors on which liquidity depends is volume.

A good trading day is one in which at least 500,000 shares are traded.

This high volumes result in buying or selling of stock in large quantities without affecting the stock prices.



3. Volatility is predicted price range of stock of a specified time period.

A $2 up and down in stock prices is a good choice while very little change should not be appreciated.



4. The ability to obtain information by understanding current pattern in market flow, also known as market depth, is transparency.

Systems such as NYSE or NASDAQ II are used for this purpose.

NASDAQ II obtains information from highest prices asked and lowest bid made while NYSE obtains information using highest bids made and lowest asked prices.

In United Kingdom, a stock is used in a different financial meaning that is bond. Bond is widely used in security markets.

Despite this, shares are the same if they are used in specified corporation issued stock.