Recently, I’ve been thinking about how to consistently profit from the day-trade strategy, and after reviewing a lot of information, I’ve finally clarified my thinking. Simply put, day trading is buying or selling stocks or warrants on the same day, then closing the position the next day, aiming to profit from overnight price fluctuations. Compared to a regular buy-and-hold strategy, this approach can generate quick profits in a short period, especially when the market is driven by strong positive news.

The core logic of day trading is actually to capture the “magnetic effect.” Large investors often use major positive news to push stock prices to the daily limit-up, which attracts a lot of chasing buying orders. Because the buying pressure isn’t fully satisfied, the stock price usually continues to rise significantly the next day, making it a good time to exit. My approach is to closely monitor market volatility, set price alerts—for example, if the Taiwan stock market hits a 10% limit-up, I filter stocks that have risen more than 7.5% that day, then judge whether to follow based on factors like news impact, speed of increase, buy volume, and whether the technical indicators show oversold conditions.

Another day trading technique involves playing warrants. When large funds buy warrants, the issuer needs to buy the underlying stock in the market to hedge, which can drive the stock price up. Day traders can sell both the warrant and the stock the next day, making profits on both sides.

I remember an example at the end of 2023 with the stock Tenquan. That morning, the stock was priced at 85.5 yuan, up 7.5%, with significantly increased volume. The reason was that September revenue hit a new high, increasing over 100% year-over-year, which was a major news event. I judged it met the conditions for day trading and bought immediately. As a result, it hit the limit-up that day, and the next day it opened high and continued upward to 92.2 yuan, earning a 7.8% profit in a single day. There was also the wheat futures trade—due to the Russia-Ukraine conflict causing a food crisis, CME wheat futures quickly surged over 6%, approaching the daily limit. I followed suit, and the next day it also opened high and moved higher, yielding good returns.

The difference between day trading and intraday trading lies in holding time. Intraday trading involves buying and selling within the same day, while day trading involves closing positions the next day. Intraday trading has lower risk because there’s no overnight risk, but day trading offers larger profit potential by capturing bigger market swings. However, day trading also carries risks, mainly overnight risk. If adverse news occurs overnight, you can’t hedge or stop-loss in real time, so you need to be especially cautious about this.

To succeed in day trading, I think technical analysis is most important. Using tools like moving averages, RSI, MACD to study price trends can help you judge entry and exit points. At the same time, closely monitor the movements of major funds, as their trading behavior reflects the true flow of market capital. Also pay attention to the relationship between price and volume—rising prices accompanied by increasing volume usually indicate a strong trend.

Risk management is also crucial. Always set stop-loss points, control the size of each trade, and avoid putting all your money into a single stock. If you want to reduce overnight risk, you can consider using futures or CFDs for hedging. The concept of day trading can actually be applied across different financial products—selecting the most promising opportunities from multiple assets can increase your chances of profit.

Honestly, day trading is a short-term operation, and the market isn’t always perfectly rational in the short run. Benjamin Graham once said that stocks are like voting machines in the short term but like weighing machines in the long term. So, doing day trading requires calmness in facing market volatility, as well as the ability to adapt to different market conditions. Trade within your means, stay flexible, and continuously learn and improve from your trading results—that’s how you can become more stable on the day-trading path.