Day trading
Liquid shares
Day traders favor shares that are
liquid—those that are easy to buy
and sell in the secondary market.How it works
Investors typically buy or sell a share based on their
analysis of economic or market trends, research into
specific companies, or as part of a strategy to benefit
from the regular dividends that companies issue.
Unlike such investors, day traders look for small
movements in prices that they can exploit to make a
quick profit. They may hold shares only momentarily,
buying at one price and selling when the price rises
by a few cents, perhaps only minutes later. Day tradersDay trading is the buying and selling of shares, currency, or other financial
instruments in a single day. The intention is to profit from small price
fluctuations—sometimes traders hold shares for only a few minutes.make profits by trading large volumes of shares in one
transaction, or by making multiple trades during the
course of the day. They buy (or sell) shares and then sell
(or buy) them again before payment becomes due, and
usually “close out” all trades (selling the shares they
have bought, and vice versa) at the end of the day to
protect themselves from off-hours movements in the
market. This is different from long-term investing, in
which assets are held for longer periods in order to
generate capital growth or income.At market opening, a day trader looks at the price of
BigBank shares, knowing that the bank has just reported
increased profits.The trader buys 10,000 shares at $490, expecting
that the price will continue
to rise.10,000QuantityBigBank
$490$490
$490PROFITS UP $US_068-069_Day_trading.indd 68 13/10/2016 16:17