What Are Day Trading And Night Trading?

Posted on Dec 7 2015 - 5:20pm by Editorial Staff


Back in the days, when stock exchanges and foreign exchanges worked with manual tickers, an analyst was an extremely important person. The analyst would go through tons of reports to pick up trends in trading and guide investors where to park their funds. With the introduction of modern computing, the role of the analyst became easier, since the computer would pick up trends and help you speculate to extract maximum CFD day trading profit.

Since foreign exchange trading is not limited to a single exchange, a trader can practically trade for all 24 hours of the day in various exchanges of the world, whether it be Tokyo or Zurich or New York. Forex trading is a highly liquid market which also happens to be active throughout the day. In comparison, the total volume of stocks traded is much lesser in value but is less risky.

As we move towards a more global economy where day and night trading are rampant both in stock as well as Forex exchanges, the role of an analyst is no longer limited to trading in his local stock exchange alone but exchanges all over the globe.

What is day trading?

Day trading is the conventional trading that major traders carry out in all stock exchanges or foreign exchange. Here, traders may deal in thousands of shares but do not hold on to shares overnight. This is done to gain small profits in each trade and end the day with a substantial earning. This type of trading is done by traders big and small, all trying to make short term gains. In recent years, major brokerage firms have spent cash and time to develop computer programs that can exploit these situations in everyday markets. There are different techniques that traders use to maximum their profits in day trading.

From holding stock for a few minutes to waiting for daily trends of stocks to set in before selling, are a few of the popular techniques that traders employ in day trading. But apart from the trusted techniques, day traders also need large capital assets, keen eye on market conditions and wealth of experience to do well in day trading. Since trading activity is limited to working hours, day traders stay active during business hours while spending their spare time to study the market and look for earning opportunities in the near future.

Trading during the day comes with high risk since there are multiple factors that affect share prices or Forex rates. This volatility can help a trader make huge gains or suffer tremendous losses as the market’s surge and crash in the wake of global events. This is where deeper pockets help day traders so that they can accommodate losses and continue to trade even the next day, when the markets open again.

What is night trading?

Night trading is buying and selling of stocks beyond the trading hours of the stock exchange. Although the exchange in a particular country might have completed its business hours, in another country, trading might have just begun. A night trader keeps an eye on major global events and trades in his stocks outside the business hours to mitigate losses or increase profits when trading resumes. A major political change or a manmade disaster can send shockwaves through all stock exchanges and a vigilant night trader can use this to his advantage by buying or selling stocks to make profits or minimize losses before trading actually begins.

Night trading has been found to be extremely helpful in areas such as crude oil or foreign currencies where market volatility can be high and traders can use global cues to adjust their trading. However, a major problem with this type of trading is the lack of enough buyers during of peak trading which increases the spread of the transactions. So, a night trader needs to take into account many more factors, when making his decision about buying or selling during night trading.

In comparison to day trading, night trading comes with lesser risks and better chances of mitigating losses as the events take a toll on the markets. The lesser risks also mean lesser chances of making huge profits in the trade, since the liquidity runs low as does volatility.

To summarise, a good analyst not only understands the intricacies of day trading but also the risks that come with night trading. Striking a balance between the two, along with understanding of different market trends and their policies is the true hallmark of a good analyst and the one who can make good CFD day trading profit.

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Editorial Staff at I2Mag is a team of subject experts.