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There are numerous ways to invest in the financial markets, but day trading has emerged as arguably the most popular approach. By speculating on the small price fluctuations that occur throughout the day, traders can generate impressive returns, often only requiring positions to be open for a few minutes.
As one of the leading providers of CFD day trading, we, at CAPEX, have put together the following guide to answer the “what is day trading?” question and help you get started.
One of the biggest advantages of day trading CFDs is that you can gain exposure to numerous financial markets. At CAPEX, we offer trading in over 2100 different instruments, to ensure anyone trading with us has plenty of options when it comes to which markets they choose to focus on.
Any of the CFDs listed on our site are suitable for day trading, meaning you can speculate on all manner of financial assets, including commodities, Forex, cryptocurrency, stocks and bonds. Eventually, you might find you prefer one or two markets in particular, but certain markets trade at different times, so by offering more instruments, traders using our platform can enter the markets around the clock.
At CAPEX, we believe that nothing beats experience when learning how to start day trading. That is why we offer all our customers a demo trading account as standard. Whilst we will always recommend conducting thorough research before entering the world of trading, using a demo account lets you apply what you have learned without risking your capital.
Using a CAPEX demo account means you can open and close trades in real-time, based on real market data. By using virtual funds, you have a risk-free environment in which to try out the various trading tools, get a feel for how prices move and perhaps even test out a few popular trading strategies.
So, what is day trading? Well, the term is somewhat self-explanatory: day trading involves opening and closing positions within a single business day. Whereas traditional investing often involves holding a position for years – even decades – day traders look to capitalise on the small price fluctuations that occur throughout the day. That’s what is behind the day trading meaning.
Thanks to the versatility of CFDs, here at CAPEX, we can offer day trading in a variety of different markets. CFDs – or Contracts for Difference – effectively allow you to speculate on the movement of a particular asset, whether it be gold, the FTSE 500 or Bitcoin.
One thing to know about day trading CFDs is that, when you open a position, you aren’t actually buying or selling the underlying asset. Instead, you are speculating on its price movement. In this respect, day trading differs from traditional investing wherein you often acquire a holding or take ownership of an asset.
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One of the reasons day trading is so popular is because it offers several advantages over more traditional forms of investing. These include:
One great thing about trading over investing is that it’s possible to speculate on the price movement of an asset in either direction. For example, if you think the price of Apple will go down, you can choose to issue a sell order (going short). On the other hand, if you think it will go up, you issue a buy order (going long).
As we’ve already touched upon, day trading CFDs allows you to access numerous markets and assets without having to understand new procedures and transaction particulars for each one. With CAPEX, for example, you can trade Forex, cryptocurrency, stocks, bonds, indices and more – all via CFDs.
Whereas traditional investment strategies often involve waiting years for returns, many day traders will often open and close numerous positions in a single day. If these trades prove to be successful, then day trading can effectively provide a steady income stream.
Many day traders utilise leverage to maximise their returns. Effectively, this involves borrowing additional funds from your broker to gain more market exposure. At CAPEX, we offer leverage starting at a 1:2 ratio, up to a maximum leverage capped at 1:30 for retail traders.
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Day trading is known for having a fairly steep learning curve and those new to the markets should be aware that it is possible to lose money. However, using an industry-leading platform, such as those that power the CAPEX trading experience, gives you plenty of tools for managing your trades.
When opening trades through any of the CAPEX platforms, you have the option of issuing stop/loss or take/profit orders. These are effectively safeguards in the event that a position turns against you.
For example, a stop/loss order means that if you have predicted the price of an asset to rise, but it in fact begins to drop, you can set a point at which the trade will be closed automatically, thus minimising your losses.
Now our day trading guide has gone some way to answering the question ‘what is day trading’, it’s time to look at how to actually find the best online broker. The first thing you’ll need to do is find a reputable broker that can give you access to the financial markets. A quick internet search will tell you that there are numerous platforms out there, so to help you decide we’ve put together a list of some key features to look out for.
CFDs are complex financial instruments and brokers must adhere to strict rules and regulations according to the jurisdictions in which they operate. This means that a single platform may need to hold several different licences.
For example, we are licensed and regulated by the Cyprus Securities and Exchange Commission, as well as being registered with the Seychelles Financial Services Authority, the South African Financial Sector Conduct Authority, and the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority.
These licences act like a seal of approval and offer reassurance that any platform is operating within the bounds of the law.
There’s much to learn when it comes to day trading, meaning it’s important to have help on hand, should you need it. When looking for the best online trading platform, it’s important to make sure you have a few options for getting in touch. At the very least, a platform should provide you with ‘live’ support – whether it is via telephone or webchat.
Of course, it’s also important that help is available in your preferred language and that customer service agents are knowledgeable and courteous.
If you’re serious about trading, then you are probably going to end up spending quite a lot of time on a trading platform. With this in mind, it’s important that a platform has the right look and feel – something often overlooked by traders eager to access the markets.
Ideally, you want to find a platform that offers a degree of choice when it comes to trading platforms. At CAPEX, for example, we offer our own WebTrader as well as the popular MetaTrader 5 (MT5) platform. Both are highly intuitive and with customisable charting opinions, meaning you can set yourself up with the perfect trading environment.
There are different levels of trader – some might be intending to devote a few hours a week to the markets as a way of generating another income stream, whereas others might be professional traders looking for a new platform. To accommodate a variety of clients, the top brokers will provide various levels of account type.
Here at CAPEX, we cater to every experience level by providing five basic account types – Basic, Essential, Original, Premium and Signature. The differing account types means that you can choose the one that best suits your own trading goals.
Ultimately, trading is all about making a profit so you’ll want to find a platform that offers competitive fees and/or spreads. Prices can vary a fair bit from one operator to another, but any reputable firm will be completely transparent over its pricing structure.
At CAPEX, we don’t charge commission for day trading. Instead, our prices are reflected in the spread. This means that you can see exactly how much you will be paying for each transaction. Other platforms might charge a flat fee for all commissions and may or may not have smaller spreads.
There are also other costs to be aware of, with some platforms charging a monthly account fee, inactivity fee and/or overnight swap fees.
Once you’ve chosen a suitable broker, you’ll need to open an account to actually start making trades. This is usually fairly straightforward, though the onboarding process can differ from broker to broker.
RegisterRegister an account on CAPEX.com and start trading.
VerifySend over your documents and verify your account.
DepositLogin into your CAPEX.com account and deposit money.
TradeStart trading with CFD’s and over 2100 other instruments.
As we’ve mentioned above, we at CAPEX offer trading in over 2100 different instruments. Whilst we’d advise most novice traders to focus on a particular market until they build their trading experience, as you progress through your journey you might want to start exploring new possibilities. This is particularly relevant if you prefer to trade at your own convenience as some markets, cryptocurrency for example, trade around the clock.
Once you have mastered the basics of trading then you might want to start looking into trading strategies. A strategy can be as simple as working out a weekly budget and trading schedule. Alternatively, you might also want to explore more technical approaches, such as the Fibonacci strategy. The good news is you can apply any strategy risk-free with the CAPEX demo account.
Day trading often involves making high volume transactions that result in returns of just a few per cent. To maximise these returns, many more experienced traders use leverage to gain more market exposure.
Hopefully, now we’ve answered the question ‘what is day trading’ and given you a solid overview of what’s involved. The advantages of this approach speak for themselves and thanks to leading online platforms like CAPEX, the markets are more accessible than ever before.
Whilst trading undoubtedly has a steep learning curve, you can quickly get to grips with the markets by joining CAPEX today and trying out our demo account – that way you can see if day trading is right for you, without risking your capital.