By www.ProfitableTradingTips.com Rebate Trading in Day Trading Rebate trading in day trading is a way that market makers can profit. This trading style makes use of electronic communications network rebates as the first line revenue source for traders. In the world of electronic trading, networks charge a commission to traders who enter orders to be filled at the best available prices. Those traders who place limit orders to buy or sell add liquidity to the market and for this they are rewarded in rebate trading in day trading. The placing of limit orders functions as market making similar to the market making function of floor traders in a voice outcall system. This can be one of the more profitable day trading strategies and one less prone to great risk. What Are Limit Orders? Traders place limit order in rebate trading in day trading. Limit orders can be used in range trading in day trading and in trend following in day trading. In these two examples traders use technical analysis to predict where stock prices are going. Then they set their stops in order to gain profits and prevent excessive loss. The stops are, in fact, limit orders. Limit orders are a common means of buying only the price you want to buy at and selling only at the price you want sell at. Oftentimes it takes longer to fill a limit order than “best available price” orders. In rebate trading in day trading the goal of the trader is first of all to profit from as many trades as possible and second of all to place as many low priced trades as possible in stocks that trade in high volume in order to gain rebates. What Stocks to Trade In rebate trading in day trading the trader always prefers to make profitable trades. However, because a large part of his income may come from rebates, he will aim to trade stocks that trade in high volume so that his trades are completed promptly. The more trades he makes the more money he makes in rebate trading in day trading. If the trader buys and sells low volume stocks he may not be able to exit his positions and at times will have capital tied up on trades that do not execute. Rebate Trading As Part of a Larger Plan Rebate trading in day trading need not be an end in and of itself. To the extent that a trader can combine rebate trading with scalping in day trading, trend trading, range trading, or other strategies he may find a path to excellent profits. Nevertheless, the trader may often need to decide if he or she is looking for profits by taking the best available price in a fast moving market or if he or she plans to only place limit orders in search of profits by rebate trading in day trading. To the extent that a trader can combine strategies it may be profitable but sometimes traders needs to pick one strategy, such as rebate trading in day trading, and stick to it.