Chapter 1: Introduction to Day Trading

What is Day Trading?

Day trading is the practice of buying and selling financial instruments within the same trading day. Day traders capitalize on small price movements in highly liquid stocks, currencies, commodities, and cryptocurrencies.

Key Characteristics:

• Short-term focus: Positions are opened and closed within the same day
• High frequency: Multiple trades per day
• Leverage usage: Amplifying potential profits (and losses)
• Technical analysis: Heavy reliance on charts and indicators

Market Overview

Forex Market (Foreign Exchange)

• Daily volume: $7.5 trillion
• Trading hours: 24/5 (Sunday 5 PM EST - Friday 5 PM EST)
• Major pairs: EUR/USD, GBP/USD, USD/JPY, USD/CHF
• Leverage: Up to 1:500 (varies by broker and regulation)

Gold Market (XAU/USD)

• Safe haven asset: Often rises during economic uncertainty
• Trading hours: 24/5 (follows forex hours)
• Volatility: Moderate to high
• Influences: Economic data, inflation, geopolitical events

Cryptocurrency Market

• Daily volume: $50+ billion
• Trading hours: 24/7
• High volatility: Can move 10%+ in a single day
• Major pairs: BTC/USD, ETH/USD, BNB/USD

Getting Started

Essential Requirements:

1. Capital: Minimum $25,000 for US stock day trading (PDT rule)
2. Technology: Fast internet, reliable computer, backup systems
3. Education: Understanding of markets, analysis, and risk management
4. Broker: Regulated, low-cost, fast execution
5. Strategy: Well-defined entry/exit rules

Trading Sessions

Forex Sessions:

• Sydney: 5 PM - 2 AM EST
• Tokyo: 7 PM - 4 AM EST
• London: 3 AM - 12 PM EST
• New York: 8 AM - 5 PM EST

Best trading times: London-New York overlap (8 AM - 12 PM EST)

Risk Warning