How to Buy and Sell Stocks on the Same Day and Make Money

Buying and selling stocks on the same day - four clocks representing world's time zones
Bill Cascade   NEW 31/07/2019 00:00:00 Guides

Some people find that trading stocks over the long term becomes a little dull! Here, you buy your stock one day but then hold onto it for months or even years. How about buying and selling stocks on the same day!

The idea of buying and selling stocks to make money from them on the same day is more appealing to many people. 

For those looking to take advantage of upward trends, this is the better solution for them. Referred to as Day Trading, this is a fast-paced environment offering fantastic results.

Here we look at what day trading involves. We also consider who is more suitable for it. And, more importantly, how you can begin making money from it.

What is Day Trading?

Day trading in its purest form is just that – trading daily or buying then selling stocks on the same day. Day trading has been a firm favorite with traders for many years now. This is a method which allows you to get further involved in the market. It also ensures you come away with instant results at the end of each day.

Day trading works by buying and selling shares over one single day. Then, before the market closes for the trading day, you’ll likely have made a profit. This profit comes from those small price fluctuations. These are what has occurred over the space of the trading day.

Who Is Day Trading Suitable For?

Day trading may be conducted over a short time frame. But the knowledge required to perform it is not as quick to pick up though! 

One of the biggest mistakes people make here is to assume that day trading requires no real effort – or that it requires minimal trading knowledge. Day trading demands more experience and expertise than other long term trading strategies.

Thus, day trading is a risky process. The daily price fluctuation of stocks is impossible to predict. Thereby you do need a good level of skill and indeed determination.

This type of instant trading is suitable for those with all-round market experience. This knowledge can then further grow as their day trading account balance grows!

This is why many will recommend turning to the professionals here. Especially so if you are new to the world of trading. 

Yet, that isn’t to say you can’t successfully buy and sell stock on the same day and make money by yourself. Apply the same mindset and work ethic that professional day traders do, and you too could make good money here. 

The Main Rule to Adhere When Taking Part in Day Trading

There is one rule which you will have to carefully follow when taking this path. So, make a note of this before you begin any day trading.

To buy and sell stock on the same day as many times as you want to, you need to have an account. This is an account which is approved for day trading. Those trading without will be prone to trading account restrictions. Worst-case scenarios may see their accounts frozen.

Some newbie traders find it tempting to bypass this and try to work around it. Yet, if you persist and make four or more days trades over five business days, you will be spotted. Once your intentions are self-evident, you’ll be flagged as what they call pattern day traders

At this stage, you will have to look at sorting your account status if you wish to begin trading again. So, it pays to start off correctly if you want to see good financial results at the end of the day.

How to Get Started with Day Trading 

Buying and selling stocks on the same day - growing money as plants visual metaphor

If you’re interested in making money this way, there are several methods that you can use. These will help you better your day trading activities.

Consider What You Want to Achieve by Day Trading

An immediate and most obvious answer here is money! But, consider your starting point as a trader. Are you looking at making an ongoing profit daily and thus looking to make this your career? More importantly, will you be relying on those profits you could make here to pay your day to day living costs? 

Or, is this a hobby whereby you won’t be too concerned when some days don’t result in the profit you initially imagined?

Your responses here will help you assess how to approach your day trading activities. 

If you’re new to day trading, it’s advised you begin with a demo account. This gives you first-hand experience, ensuring you don’t lose your money immediately.
However, if you do have a good solid grasp of trading in general, you’ll have a better starting point.  

Plan Your Trading Strategies and Commit

Once you’re ready for buying and selling stocks on the same day, think about your approach. The most promising strategy recommended here is that of self-discipline.

Set traders some stringent targets before they begin day trading. These can include what you expect the shares to rise to and when you’ll consider selling them. This ensures you don’t wait while hoping for more, thus missing out on a day’s profit. 

Make friends with the trends. This will allow you to pick shares that are already rising. Then make a pact to sell at the days end at the latest. It’s easy for day trade to develop into long term trades if you create the mindset of not selling a loser. So, work to sell your stock each trading day.
Also, here, consider your trading set up and commitment to active trading. If you intend on making a success of day trading, you’ll need to be near your screen regularly. This will allow you to swiftly make and put in place your decisions. Some day traders find the right balance by trading two to three hours per day. 

Thus, place importance on your computer or laptop and internet connection. Some day traders prefer to use two monitors. But, the most crucial element here is equipment which doesn’t run slow. Neither should it crash repeatedly. An internet connection that is quick and reliable is also vital here.

Open a Day Trading Account

Once you’ve got your set up in place and are confident, the final stage here is opening a trading account. For those looking to buy and sell stocks on the same day, the recommended amount required is at least $25,000. This will allow you to open a margin account and qualify for day trading activities.

This $25,000 can be made up from cash or from equity. Thus, once fully invested and on margin, you’ll need to keep your account minimum net worth at $25,000 or above. This applies if you’re planning on making at least four trades over five days. If this level drops, you’ll need to deposit extra funds into your account.

This amount must be in your account in its entirety before you can begin making any trades.

The Advantages and Disadvantages of Day Trading

Buying and selling stocks on the same day - graph of growth

The many advantages of buying and selling stocks on the same day include:

  • Knowledgeable traders can turn day trading into a successful and lucrative career
  • Day trading is a steep learning curve but offers more excitement 
  • Day trading reduces those more prolonged time frame investments from year to hours
  • If you can afford to take the risk, day trading can earn you serious money
  • Returns can be increased through leverage
  • There are many perks with larger day trading institutions. For example, expensive software, direct helplines, and other resources.

There are several disadvantages worth noting with day trading as well, including:

  • Day Trading carries a high risk 
  • There is never a guarantee that day trading will make you money
  • Significant numbers of day traders suffer financial blows in their first few trading months
  • Some find day trading expensive to start with 
  • Day traders must have at least $25,000 in their account
  • Amateur traders can lose a lot of money very quickly through day trading 

Final Words on Buying and Selling Stocks on the Same Day

In concluding, you may be wondering whether day trading is for you? It’s a thrilling means of trading on the market. You also don’t have to wait as long as other trading methods for results.

But because the buying and selling stocks is on the same day, it doesn’t mean the profit is daily! This is especially so at the very beginning of your day trading journey!

Day trading does need commitment and quality time dedicating to it every day. But, by doing so, you could grow your trading activity here into a profitable operation. 

Thus, you could indeed soon be buying and selling stocks on the same day and making money in the process.

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