Canada is a major developed nation with over $1.988 trillion in gross domestic product. It is a wealthy nation with a per capita gross domestic product of more than $46,000 and a population of more than 37 million. The country’s economy is highly diversified, with crude oil and natural gas, technology, finance, and mining as its leading industries.
Moreover, the nation is a signatory to the United States, Mexico, and Canada (USMCA) trade agreement, formerly known as NAFTA.
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What is day trading?
Day trading is the straightforward practice of buying and selling financial assets for the purpose of generating a profit. It is comparable to investing, with the exception that traders have a very short time horizon. Traders typically purchase and sell assets within a few hours.
If you buy and sell a security within the same day, you are engaging in day trading. The objective of day traders is to generate a profit from the daily price fluctuations of an asset. Day traders frequently purchase and sell the same security multiple times per day.
Assets you can day trade
Day trading is possible with a number of popular assets.
- Forex is the process of trading various currency pairs, such as EUR/USD and USD/CAD.
- Stocks are shares of companies like Shopify and Blackberry.
- Commodities, including crude oil and natural gas.
- Bonds such as Invesco QQQ and SPY
- Dow Jones and S&P TSX are two examples of indices.
Day trading strategies
Scalping
Scalping focuses on profiting from small market price fluctuations. Numerous traders who employ this strategy execute hundreds of transactions per day.
These small profits frequently accumulate rapidly and are viewed as less risky.
Range Trading
Range Trading is slightly more complex. It involves using market support and resistance levels.
Essentially, this strategy involves making calculated decisions based on the market’s current popularity in order to determine whether it will be profitable or not.
News-based trading
For day traders, a news event can be a source of valuable data, as is any information that can affect stock prices. This can include anything from the introduction of a new product to industry rumors. This data assists day traders in making strategic decisions.
High-frequency trading
High-frequency trading enables professional day traders to use specialized algorithms to capitalize on market fluctuations.
Trend following
Trend following uses a security’s past performance to determine its current risk. If the investment has a history of stability, there is a good chance that it will continue to be stable.
Contrarian Investing
Contrarian Investing is a strategy followed by certain investors in which they sell what other investors are buying and purchase what other investors are selling.
Price action
Price action involves analyzing the price fluctuations of an investment over time and forming an opinion based on the trend.
Fundamental trading
Fundamental trading entails using fundamental analysis, such as the examination of key economic indicators and financial figures, to determine whether to buy or sell.
Risk of day trading
Due to the number of inherent risks, day trading can be intimidating for the average investor. Here are some of the risks of day trading:
- Day traders typically incur severe financial losses in their first few months of trading, and many never achieve profitability.
- Day trading is a very stressful full-time occupation: Concentration is required to observe dozens of ticker quotes and price fluctuations in order to identify fleeting market trends.
- Day traders rely heavily on borrowing funds; day-trading strategies use borrowed funds as leverage to generate profits. Many day traders not only lose their entire investment capital but also incur debt.
- Do not believe claims of effortless earnings: Be wary of hot tips and expert advice from newsletters and websites catering to day traders, and keep in mind that day trading seminars and classes may not be objective.
Should you start day trading?
If you are determined to engage in day trading, you must be willing to commit to the following steps:
- Ensure you have knowledge of the trading world and a solid understanding of your risk tolerance, capital, and objectives.
- Be willing to devote time to practicing and refining your strategies.
- Start small. Concentrate on a few stocks as opposed to spreading yourself too thin. Going all-in can complicate your trading strategy and result in significant losses.
- Try to maintain composure and keep emotion out of your trades. Avoid deviating from your plan.
Best time to day trade in Canada
Depending on your broker, day trading is possible 24 hours a day, seven days a week. Cryptocurrencies are the most popular assets that trade 24 hours a day, seven days a week. Utilizing brokers such as Coinbase, FTX, and Huobi, you can day trade these assets.
If your broker offers global stocks, you can also trade them. Our traders at DTTW have access to more than 50 international markets. This allows you to trade for longer periods per day.
Nonetheless, if you are interested in Canadian companies, your trading duration will be brief. Typically, the TSX stock market opens at 8:00 a.m. and closes at 5:00 p.m. (ET). Between 5 p.m. and 5:30 p.m., the post-cancel period exists. Stocks on the CSE typically open at 9:30 a.m. and close at 4:00 p.m.
The optimal times to trade these stocks intraday are just after the markets open and just before they close. Check out https://forexcanada.ca/forex-time-canada/ resource for more information.
Conclusion
Day trading is more art than science, requiring a profound understanding of the market. A degree of risk is involved. Ensure that you know what you’re doing before you begin. If you enjoy the excitement and believe you can handle the associated risks, day trading may be for you.