Day traders, Financial Management

Assignment Help:

Day Traders

Day traders are basically the market markers. They create liquidity in the market by frequently buying and selling stocks throughout the day in the hope that the price of the stocks will fluctuate so that they can make profits with that fluctuation. Most traders buy stock and want the prices of a stock to rise so that they can make a profit, but some have alternate arrangements by following short selling of stocks to profit when their prices fall and purchase again at lower prices to make profit.

Day traders hold stocks anywhere from a few seconds to a few hours but at the end of the day they will always setoff their position before the stock exchange's normal closing time. They specifically control their activity to avoid risks arising from events happening after closing hours of the market. If they carry over the stock for next day they would be at risk of losing out on their gains due to negative news inflows on stocks, sectors or the markets. Therefore, the objective of the day trader is to benefit from frequent purchase and sale activities of any underlying stock in a particular day.

Day traders are further categorized into two different groups: (a) scalpers, and (b) momentum traders.

Scalpers: This group of day traders trading is like playing hot potatoes. Their activities are limited to the rapid and repeated buying and selling of a large volume of shares during a very short period of time, anywhere from a few seconds or a few minutes at a time. The group trades on those shares that have high liquidity and momentum in prices. New listing of shares is one kind of example where Scalpers are active. Their objective is to earn a small per share profit on each transaction at a minimum risk.

Momentum Traders: These types of day traders identify and trade stocks that are moving in a particular range during the day. Their objective is to buy stocks at the bottom and sell them at the top or vice-versa.

 


Related Discussions:- Day traders

Explain intuition behind the npv capital budgeting framework, What is the i...

What is the intuition behind the NPV capital budgeting framework? The NPV framework is a discounted cash flow method. The method compares the present value of all cash inflows

Determine the movements in working capital, Movements in working capital ...

Movements in working capital The year-end balances of trade, inventories and other receivables and payables are taken for current year-end as well as last year-end statement

Valuation using treasury spot rates, To understand how treasury spot ...

To understand how treasury spot rates are used to calculate the arbitrage-free value of the treasury security, we will take imaginary treasury spot rates (given i

Public provident fund, Public Provident Fund (ppf) The Public Provident...

Public Provident Fund (ppf) The Public Provident Fund (PPF) scheme was started in 1968-69 with the aim to provide a financial instrument to workers in the unorganized sector to

Determine the working capital cycle, Working capital cycle (operating/tradi...

Working capital cycle (operating/trading/cash cycle) It is the time between paying for goods supplied and final receipt of cash from their sale. It is desirable to keep cycle a

Concepts of working capital, CONCEPTS OF WORKING CAPITAL There are two ...

CONCEPTS OF WORKING CAPITAL There are two concepts of Working Capital - Net working capital and Gross Working capital. 1. Gross Working Capital Gross Working capital re

Sources of funds, What are sources of funds for an assignment?

What are sources of funds for an assignment?

Explain exchange rate affect the return from foreign market, Explain how ex...

Explain how exchange rate fluctuations influence the return from a foreign market measured in dollar terms. Discuss the empirical proof on the effect of exchange rate doubt on the

Treasury notes or t-notes, Treasury Notes or T-notes are the securiti...

Treasury Notes or T-notes are the securities issued with maturities of more than one year and but not more than 10 years. All these securities are coupon securiti

Types of us treasury securities, Under treasuries, there exist ...

Under treasuries, there exist different types of securities like treasury bills, treasury notes, treasury bonds, inflation protection securities

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd