Day Trading 101: What to Buy and When to do it


Day trading isn’t easy.  And that’s a given.  It requires a lot of energy, as well as a tremendous amount of discipline.  However, if you can do it right, you can achieve huge rewards. 

Day trading written on a board

And the first step to day trading properly is to know what stocks (or other assets like currencies) to buy.  After you determine which you want to buy, you got to know the precise moment when to do it.

In this article, we’ll talk about the things you need to focus on when buying an asset, as well as the conditions that you should look into to know when exactly to buy the asset.

What to look for

As a day trader, your goal is to make money by taking advantage of price fluctuations in individual assets, like stocks, futures, and options, along with leverage. 

When you’re not sure which to shift your focus on, you can take into consideration the following:


Liquidity is the ease in which you can convert an asset into cash.  High liquidity makes it easy for you to enter and exit a trade at a good price.  And when we say ‘good price,’ we’re referring to tight spreads, which is the difference between the bid and ask price, and low slippage, which is the difference between the anticipated price of a trade and its actual price.


Volatility is a day trader’s friend as long as he or she is careful with his trading steps.  This simply refers to the measure of expected daily price range, which refers to the range in which you operate.  Remember that higher volatility means either greater loss or greater profit.

Trading Volume

This one talks about the number of times a stock or another asset is bought and sold in a specific timespan.  The time period measured is typically within a day of trading, which we also call the average daily trading volume.

When to Enter the Trade

After you’ve determined which stocks or assets you want to buy, you need to know when to do the deed.  In other words, you need to identify entry points, which is practically the exact moment you’re going to invest. 

You can use some tools to accomplish this job, such as:

News and Updates

It’s no secret that news affects any asset’s movements.  News can either make or break the trend in an asset’s movement.  So it’s very much advisable to be in the loop on the time.  Stay updated and be on the lookout for potentially market-moving news.

ECN/Level 2 Quotes

ECNs are computer-based systems that show the best available bid and ask quotes from many market participants.  This automatically matches and executes orders.

Meanwhile, Level 2 is a subscription-based service that provides real-time access to the Nasdaq order book composed of price quotes coming from market makers that are registered in each Nasdaq-listed and over-the-counter Bulletin Board securities. 

Working in combination, they can give the day trader a better feel of the orders that are executed in real time.

Final Word

Being a day trader can be rewarding venture if you can do it well and properly.  As a final reminder, keep in mind that it’s better to set a very specific group of conditions as your signal to go into a trade.  A more specific condition works much better at giving signal and is extremely more testable than a vague one.

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