Day trading is different from investing; these types of traders hold

their stock for only one day. They close their positions at the end of
every day and then start all over again the next day. By
contrast, swing traders hold securities for days and sometimes even
months and investors sometimes hold for years.
 
Day trading is about discipline and training of mind. The goal of a
day trader is to capitalize on price movement within one trading day.
Day traders maximize profits by leveraging large amounts of capital
to take advantage of small price movements in highly liquid stocks
or indexes. Day trading can be either extremely profitable or
extremely unprofitable, and high-risk profile traders can generate
either huge percentage returns or huge percentage losses. Some day
traders manage to earn millions per year solely by day trading.
Zero Overnight risk: One of the best advantages of day trading is
ability to close your position at or before the end of the trading day.
Increased leverage: Day traders usually need to put up less money
to get into day trading and succeed at it. Because of low margin
requirements for day trades you enjoy a greater leverage on your
trading capital. This increased leverage can multiply your profits.

Profit in any market direction: Unlike long term investors who keep
their stocks for long duration to capitalize only bull market, day
traders can take advantage of both rising and falling market.

High returns: If successful, the rewards of day trading can far

exceed the risks. Of course if you begin day trading it will not always
mean that you get high returns all the time. In the beginning you
have to learn the ins and outs and fluctuations of the market to keep
up.
Risks associated with day trading: Day trading can be very risky.
Day traders should not risk the money that they cannot afford to lose.
It is essential that you have the discipline and proper knowledge to
succeed in day trading. You need to learn how to take a loss,
because losses will occur, especially at the beginning stages. The
rewards of day trading are high, but so are the risks.

Possibility of large losses: You should be prepared to suffer

severe financial losses; this is part of the process. Nobody makes
money every day.

Demands of day trading: Day trading requires a lot of time and

attention paid to the markets, trends, technical indicators and
national and international news regarding capital markets. A lot of
time has to be put to focus the market hours.
Stress: Stress is a routine part of every day trading job. Stress and
anxiety arises while tracking various movements within few minutes.

Overtrading: Overtrading means taking highly risky trades or/and

trading too large shares.

Borrowed money: Day traders rely heavily on exposure provided by

broker or buying stocks on margin. Borrowing money to trade stocks
always holds some risks.

Understanding market trends: Day traders intend to make profits

on all major and minor stock movements, it is very important that they
have knowledge of market trends, technical analysis and investment
charts. If this knowledge is absent form a day trader’s skill base, then
in spite of making profits, he may run into huge losses.
Out-of-pocket expenses: Starting out as a day trader can cost a lot
of money out of pocket. These expenses can include: software (and
hardware), commissions, manuals, and other resources. It is very
important to develop a budget for these out-o-pocket expenses
before entering the arena of day trading.

Technology: Operational problems like power outages,

software/hardware issues, disrupted internet connections etc. could
hamper your day trading.
Scalping: Scalping is one of the most popular strategies. Scalping is a
trading style focusing on taking profits on small price changes, generally
immediately after one enters a trade becomes profitable. It requires a strict
and aggressive exit strategy because one large loss could wipe out the
several small gains realized.

Fading: Fading involves shorting stocks after rapid moves upwards. This
strategy involves a considerable amount of risk. But it is also more profitable.
The fading strategy is based on three assumptions: i) the stock is
overbought, ii) early buyers are ready to begin taking profits and iii) existing
buyers may be scared out. Although risky, this strategy can be extremely
rewarding.

Daily pivots: This strategy involves profiting from a stock’s daily volatility.
Pivots are extremely useful tool for range-bound traders to identify points of
entry and for trend traders and breakout traders to spot the key levels that
need to be broken for a move to qualify as a breakout.
Momentum Trading: Momentum trading is when a trader sees a
stock price picking up and joins it. This strategy usually involves
trading on news releases or finding strong trending moves
supported by high volume. The investor will take a short or long
position in the stock anticipating that the momentum of the stock will
continue. Here the price target is when volume begins to decrease
and bearish candles start appearing.
To engage in momentum trading, you must have the mental
focus to remain steadfast when things are going your way and
to wait when targets are yet to be reached. A momentum trader
is only concerned with stocks in the news. These stocks will be
the high percentage and volume movers of the day. Momentum
trading requires a massive display of discipline, a rare
personality attribute that makes short-term momentum trading
one of the more difficult means of making a profit. Let’s look at
a few techniques for successful momentum trading.
Dr. Alexander Elder had designed an impulse system for momentum
trading. To identifying appropriate entry points the system simultaneously
uses two indicators:
indicators

Exponential moving average - EMA is used to measure market inertia i.e

for finding uptrends and downtrends
 
Moving Average Convergence-Divergence – MACD measures market
momentum.
When EMA rises, the inertia favours the bulls, and when EMA falls, inertia
favours the bears. To measure market momentum, the trader uses MACD
histogram, which is an oscillator displaying a slope reflecting the changes of
power among bulls and bears. When the slope of the MACD histogram
rises, bulls are becoming stronger. When it falls, the bears are gaining
strength. The system issues an entry signal when both the EMA and MACD
move in the same direction, and an exit signal is issued when these two
indicators diverge.
If signals from both the EMA and the MACD histogram point in the
same direction, both inertia and momentum are working together
toward clear uptrends or downtrends. When both the EMA and the
MACD histogram are rising, the bulls have control of the trend, and
the uptrend is accelerating. When both EMA and MACD histogram
fall, the bears are in control, and the downtrend is paramount.

Times you trade: The unfavourable time for momentum traders is

during lunch (12 - 2pm), where volume dries up and the moves are
choppy to flat. So momentum traders should limit the times they
trade to the first and last hour of the day trading session. This is
because volatility is very high during these two time slots.
The key to being a successful momentum trader is to know when to
exit the position. Once you have identified and entered into a strong
momentum trade i.e. when daily EMA and MACD histogram are
both rising, you should exit your position at the very moment either
indicator turns down.
THANK YOU