Day Trading Talk

Mostafa Soleimanzadeh asked:


In this article I want you become more familiar with Day Trading thoughts. At first, what is Day Trading? “Day trading” means that a trader tries to make money buying and selling stocks during the day taking advantage of the daily price movement. Day traders end the day flat (with no open positions).

It is commonly stated that 80-90% of day traders lose money. Also price movements in a day are few, so why people trade only in a day? What are advantages of being a day trader?

Advantages of Day Trading

Less Stress (Zero Overnight Risk)

To avoid the risk of price gaps (differences between the previous day’s close and the next day’s open price) day traders close all their positions at the end of a trading day. Because of this, day trading is less stressful than holding stocks overnight. After market closed you are not worried what will happen until tomorrow and what news will distribute. You never ‘lost sleep’; in the morning have a nice feeling because you don’t care what the market’s doing at the open.

Cheaper Commission

One thing that makes day trading potentially profitable is commission structure. Day traders pay ‘per share’ instead of ‘per trade’ structure . If you pay about $10 per trade now when you become a day trader, you may pay about $0.01 per share.

Increased Leverage

Day traders could have 4 times their equity as intraday buying power. This great margin can increase your profits if used wisely. This increased leverage makes day trading very risky, especially if one has poor discipline, risk or money management.

Profit in any market direction

Day trading often will utilize short-selling to take advantage of declining stock prices. The ability to lock in profits even as markets fall throughout the trading day is extremely useful during bear market conditions

Learn More about Day Trading



Jamie

Sacha Tarkovsky asked:


So, you’re thinking of buying a day trading system? Well there is one way to find out if it works and here it is:

Ask for the real time track record.

That’s how many real dollars has it made, in the market for the seller, over the long term 2 years.

Ask for it and we can guarantee you won’t get one.

Why?

Because day trading doesn’t work and is based upon logic that is flawed.

You may get some testimonials (lucky traders after a couple of trades or friends) or a hypothetical track record of the day trading system.

Let’s consider what hypothetical means – In hindsight.

That’s right, you can look at previous price history and make a track record up knowing where prices have been!

Well that’s really hard, a child could do that

If I knew the closing prices would I make money?

UMM Hard question.

Why are there so many day trading systems sold?

Because, they appeal to the greed and ignorance of people and who don’t ask the obvious question:

Have you ( the vendor) made money?

Of course they haven’t, why would they sell it? For 50 – 100 dollars?

Day trading system vendors tend to fall into 2 categories:

1. Good writers (they know how to write great copy but have never traded) and know how to appeal to greed.

2. Failed traders or brokers, who know the language, sound knowledgeable, but can’t make money.

Why don’t day traders make money longer term?

Well the logic it is based on is dumb.

Let’s see.

We have trillions of dollars traded everyday and yet they think they can pinpoint ranges within a day or a few hours when these moves are proven to be random – yeah right.

Stops

Are to close, volatility catches them out and they lose more than they win.

That would not be so bad if they could run their profits to cover the majority of losses they take.

Can they do this?

Of course not!

Their grateful to scalp a few points, however these never make up for the huge losses they incur.

The result with forex day trading systems?

A wipe out of equity.

If you don’t believe the above, ask for the real time track record over the longer term, audited, of their own accounts making money and you won’t get one.

Conclusion is: Don’t use a day trading system.



Alfred

Mike Singh asked:


Day trading is an extremely risky way of investing in the stock market. Day trading is carried out by day traders who rapidly purchase and sell stocks over a single day period in the hope that for the very short period over which they hold the stocks (ranging from just a few seconds to a couple of hours) the value will continue to climb or fall thus allowing day traders to secure quick profits.

How do you make profits?

The method of buying and selling stocks over a very short time period can create huge profits or losses for the day trader in just a couple of minutes or hours. Statistics show that 80-90% of all day traders make a loss at the end of each trading day. However day trading has become an increasing popular form of trading in recent years as a result of the internet and increased access to information. So while day trading used to be a marginal form of stock trading reserved for the most part to financial firms professional traders and an elite group of private investors it is now also very common method of trading among casual traders.

What do day traders look like?

Day traders are defined as traders who place four or more round-trip orders over a five day time period and the total trading activity over a day is 6% or more of the total value of all shares held. Brokerage fees for day traders can be substantially lower than fees for other types of traders. While margins for most traders are usually around 50% of the value in traders account, day traders can face levels as low as 25%. This means that a trader can by lets say, $1000 worth of stock from an account of only $250.

Tips for surviving and thriving as a day trader

The five most common strategies adopted by day traders who seek to make are profit are * Trend following – used by all trading firms this strategy assumes that stocks that having been rising steadily will continue to rise.

* Playing news – this strategy is to buy stock in a company which has just announced good news

* Range Trading – this is where stock that has been rising and falling is bought near the low price and sold as it hits the high price range.

* Scalping – it is commonly defined as a very quick trade.

* Covering spreads – To play the spread or the make the spread simply means to buy stock at the Bid price and sell the stock at the Ask price. The difference between the bid price and the ask price is known as the spread. Because there is an historical tendency for the stock market to rise profit can be expected for this form of trading.



Joe