• Intraday day trading is a short-term investing method in which a trader opens and closes one or more trades during the same day. There are many different markets in which a day trader may participate, including stocks, bonds and commodities. Because a trader does not hold any positions overnight, he must exit them before the market closes regardless of whether the position is profitable or not.
  
  

Watch the Major Indexes

• Depending on which market you trade, always keep an eye on how the major index is performing during the day. For example, if you trade stocks, watch the Dow Jones Industrial Average, also known as the Dow. The Dow is an index of 30 blue-chip stocks, and many traders and investors follow its movement closely. If the Dow is up on the day, chances are the stocks you trade will also be up. This is not always the case, but it is a good rule of thumb to help determine which direction a stock will move.
  
  

Only Trade Liquid Stocks

• Day trading liquid stocks that have a high daily trading volume is usually safer than trading stocks of companies that are small and do not have much of a market following. As a day trader, there may be times when you need to enter or exit a position at a moment's notice. By trading a liquid stock that trades actively during the day, in most cases you should be able to get a fill on your order in a timely manner. This is not always the case with illiquid stocks, which may result in significant slippage. Slippage occurs when you place an order for one price, but the trade executes at a different price. This can work for or against you, depending on market volatility at the time you place your order.
  
  

Use a Stop Loss

• A stop loss is a type of order a day trader uses to set the maximum loss on a trade. By setting a maximum loss you do not have to worry about when to exit a trade that goes against you, which helps you maintain trading discipline. Knowing in advance the maximum amount you may lose can also help you to determine the size of your trade. For example, if you have a $100,000 account and you want to risk 1 percent on a trade, that equals $1,000. If you buy 1,000 shares of a stock that is trading at $50 per share, you would place your $1,000 stop loss order at $49, or 1 point. If the price of the stock drops 1 point to $49 during the day, your position will automatically close for a $1,000 loss. If the price does not hit your stop loss or a profit target, if you set one, because you are a day trader you must manually exit the position before the market closes.