• Daryn Fleming, Ph.D

Day Trading: How Many Investment Deals Should you do each Day?

Day Trading can be very stressful. There are so many decisions to make. When do you get in? How long do you stay in? What is your plan of action if your position looks like it may fail? One of the other questions is how many deals should you do each day? This is a question that I get asked a lot. The bottom line is that the answer will depend upon the trading style of the investor.

If a day trader wishes to minimize his exposure to the market he may only trade for the first hour or two and then again in the final two hours. This capitalizes on the fact that the first hour or so and the final hour is typically the most active. During this time frame many technical and fundamental techniques work well. These methods work because market conditions are considered "healthy," with lots of volume and activity. Lots of news is released and absorbed into the market during these hours.

Binary options traders have an advantage over traditional day traders though. Because binary options do not require big moves in the underlying assets in order to make money all you have to do is get the direction correct. It doesn't matter if what you are trading moves up .001 or $10. If the direction is correct you win the trade. So binary option day traders can easily stay the course for the duration of the market.

Depending upon the day you will typically see us trade from market open until the final hour. On Fridays we will sometimes cut out at 2 pm. On days where the market is very choppy we may cut out even early. One of the problems with short term trading is it is very stressful and can also be extremely boring. One can only sit at a trading desk in front of a computer for so long.

So, the answer to the question of how many trades per day really depends upon the person and their lifestyle. If you want minimal exposure to the market and you find the risks very stressful for the rewards then you could trade the first hour only. This is one of the best possible times to invest because of all of the "action." The effects of any news and/or financial information that was released after the last market close will show up during the first hour. Sometimes this information is released in the morning prior to the opening bell. Lots of investors place their orders overnight when the market is closed. These pent up orders sit in the "cue" until the market opens. This explains why many stocks and assets have a big move during the first half hour or so. Some days the intense activity carries on past the first hour and into the second.

Another option is to invest only during the final hour of the market. This final hour is very much like the first hour. Lots of healthy volume and activity occurs as investors take their positions in anticipation of the next day. Many companies release news and/or financial information during the final hour because they know that this is when the most investors are tuned in and watching.

As stated, with binary options we do not have the limitations that investors who trade the underlying assets have. We don't care whether the asset moves up or down big. The tiniest of moves can be profitable as long as we get the direction correct. So we can trade all day if we want to.

Money management can play a large role in the decision about how many trades to do each day. Investors who do not like the risk of short term investing could take many small positions throughout the day. The idea behind this is that the risk is spread out through many small deals rather than a few larger deals. On the other hand, if an investor is less afraid of risk and super confident in his trading abilities he may decide to do as few deals as possible throughout the day. This investor may decide to do four or five trades each day and then call it quits.

So, the bottom line here is that the number of deals each day depends upon the trading personality or style of the investor. In order to establish what this style is you should look into a mirror and ask yourself some questions. What is your primary objective for investing? Are you simply looking for extra money? Or are you trying to be a full time investor, eliminating the need for outside employment? Once you have established your particular financial needs then you can decide exactly how much and how often to trade in order to meet that need.

My particular style is to do as many trades as possible during each trading day. I do this because the amount I risk in each deal is very small. In order to have a good day all I need to do is win way more than I lose. I find this style much less stressful than risking larger amounts in a few deals. Losses are discouraging. I do so many trades that after one loss I quickly move onto the next deal.

So, what is your trading style? I hope I have provided some insight in order to help you decide. Happy investing!


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