Is Day Trading For A Living Your Cup Of Tea?
If you like working with other people’s money, then maybe day trading for a living is what you should be doing. This type of trading works daytime hours only, from the moment the stock market opens at 9am until it closes at 4pm in the afternoon, you can do a lot of trading in that amount of time. Or maybe you want to do day trading for livings with your own money, that way if you loose it, then you have no one to blame but yourself. However, it may be a good way to watch your money grow too. The following is the basic definition of what day trading is all about. Maybe it is your cup of tea, maybe not, only you can decide.
What is Day Trading?
Day trading for a living is when you take a position in the markets with a view of squaring that position before the end of that day. Day trading for a living mean a trader usually trades many times a day looking for fractions of a point to a few points per trade, however, by the end of the day he or she will close out all their positions. The goal of the day is to capitalize on price movement within one trading day. Unlike investors, the day trader will hold positions for only a few seconds or minutes, and never overnight.
What day trading really means.
The meaning of day trading is actually a misunderstood term. True day trading means not holding on to your stock positions beyond the current trading day, meaning your not suppose to hold on to your stock overnight. Trading this way is really the safest way to do day trading, this way one is not exposed to the potential losses that can happen if the stock marked is closed due to news that can affect the prices of your stocks. There are many people out there today who are not very good “day traders,” they are actually more like con artists just out to take your money. Because of greed, they will hold your stock overnight, setting themselves up for the catastrophic elimination of their capital. In day trading currency, the term “day trading” changes slightly. Because currencies can be traded 24-hours a day, there can’t’ really be any overnight trading. You can have open positions for longer than a day with active stop losses than can be activated at any time.
There are a few different types of day traders out there today, it can actually be subdivided into a number of styles.
Scalpers- This type of day trading involves the rapid and repeated buying and selling of a large amount of stocks within minutes or seconds. The goal here is to earn a small per share profit on each transaction while minimizing the risk.
Momentum Traders- This style of day trading involves identifying and trading stocks that are in a moving pattern during the day, in an attempt to buy such stocks at bottoms and sell at tops.
The advantages of day trading for a living is there are no overnight risks. Because positions are closed prior to the end of the trading day, news and events that affect the next trading day’s opening prices do not affect your client’s portfolio. Day trading for a living has a greater leverage on your client’s capital because of the low margin requirements as their trades are closed in the same market day. This increased leverage can increase your client’s profits if used wisely.
A day trader is, in every sense of the word, a short term investor or a speculator. Most of the times, he trades on market momentum, disregarding the fundamentals of the stock he is buying or selling.
His trades normally have a short lifespan, with almost all of his positions closed out by the end of the trading day. To get started on online day trading, these are the things that you should know.
Choosing An Online Broker.
Brokerage commission is not the only criterion in choosing an online broker. Make sure you choose one with a robust trading platform that can execute your trades promptly. http://Etrade.com and Scottrade are the premium brokers that offer superfast trade turnaround, and they have very attractive commission rates for hyperactive traders. But if you have to choose a low-cost broker, http://FirstTrade.com and http://AFTrader.com are the few low-cost brokers that offer decent trade turnaround.
Before starting any trade, it is essential to put in place a trading plan, and follow this plan religiously. A trading plan sets out different criteria and parameters which dictate how trading decisions should me made in all market conditions. With a trading plan, you will know whether to stop the loss and close out the trade, or to ride out this volatile period.
Make it your habit to be disciplined. In day trading, the price of a volatile stock can fluctuate very fast. There will be times when the price will move against you. Cut loss when you’re supposed to in accordance with your trading plan. By the same token, take profit when your trading plan dictates so! And don’t trade for the sake of trading. If there’s no good trading opportunity, stay out of the market.
Keep Your Emotions In Check
Never allow your emotions to rule your trading. Be disciplined, stick to your trading plan, and you will not get emotional during a trade. Trading decisions are often ruled by emotions for a trader who lacks discipline. This leads to bad decisions resulting in trading losses. Fear or greed are two emotions that are detrimental to a day trader.
To summarize, always develop a trading plan or system, and constantly tweak the plan for optimal results until it works. Be disciplined and know when to cut loss and take profit. And last but not least, get emotions out of the way when you are trading.
I hope you have benefited from this beginner guide to online day trading article. Happy trading!
You need to position yourself so that you can endure long strings of losses, and maintain your day trading system. Day trading is a high risk game as it is very speculative in nature. Top daytraders have a proven day trading system.
Discover An Effective DayTrading System. When a professional day trader prepares for the day’s market, he looks at much more than technical indicators. The most important component of a trading system is Money Management.
The most important question of a Trading System is how much to invest and how many positions to trade at the same time. You must know how to daytrade if you want to be a sucessful daytrader. It is commonly stated that 80-90% of Day traders lose money.
An investor needs to have a system that helps him to be prepared for all scenarios of a trade. You’ll need to ascertain for yourself whether you are comfortable with the levels of risk inherent in daytrading.. Remember that “educational” seminars, classes, and books about day trading may not be objective.
Day trading has become an online phenomenon in the last year which has resulted in manuals and courses on how to successfully day trade. There are a variety of online day trading services. Day traders should understand how margin works, how much time they’ll have to meet a margin call, and the potential for getting in over their heads. One cannot expect to make money day trading.