Day Trading Talk

James Ethridge asked:


Day trading is defined as the buying and selling of a security within a single trading day. It is daily, online stock trading with very short investment timeframes. Those who do this day in and day out are traders, not investors.

Because of the high profits (and losses) that day trading stocks makes possible, Day trading is often regarded as more like gambling than investing. In truth day trading is about risk taking not gambling.

Day traders work from their homes or offices. With their eyes glued to computer screens, a day trader may execute over a hundred trades a day.

But they typically do not hold stocks overnight. In fact, they may

hold stocks for only a few seconds to limit risk.

A day trader will usually sell their positions before the stock market closes for the trading day to avoid the risk of price gaps between the previous close and the next open. Some day traders consider this to be a golden rule to be beyed at all times. Other traders believe they should let the profits run, so it is acceptable to them to stay with a position even after the stock market closes for the day.

For example,at 10:00 AM a day trader might buy 1000 shares of stock just as the price begins to rise, then sell it at 10:04 AM when it is up by 1/2 ($0.50). The day trader makes $500, minus commission of about $29.95 or less per trade, that is a quick $440.00 or so, excluding taxes.

Many day traders focus primarily on the NASDAQ. It is typically more volatile than the NYSE or AMEX, so it offers more opportunities to play the intraday price waves and troughs. Volatility however also carries high risk,in the time it takes to grab a cup of coffee, a stock may move 1/2 point or more.

To some, day trading is just a numbers game. They do little research and just watch for moving stocks with good spreads. Others are more scientific about it, relying on news and technical analysis to catch intraday price changes.

Depending on your trading style and strategies, the number of trades made in a day may vary from one, to dozens or more. Some day traders manage to earn millions per year solely by day trading stocks.

Day trading has become increasingly popular among casual traders due to advances in technology, changes in legislation, and the popularity of the internet. In the past, the tools for day trading stocks were available only to professionals. But thanks to the power of the Internet, everything you need to get started is now conveniently available online.

When you are ready to start day trading, you will need to choose a trading system such as the one I recommend on my website (see Authors Bio).

This course consists of two volumes and two exercise books, which will teach you everything you need to know, even if you have never traded stocks before in your life. The new second edition has been completely revised for 2008, and includes even more detailed examples, refined trading strategies and online access to a set of in-depth training videos.

Day trading is not a get-rich-quick scheme, it is a mentally and psychologically challenging activity and is by no means meant for everyone.



Francis

John Howard asked:


Forex is an open market for trading foreign exchange where money itself is bought and sold. ‘Forex day trading’ is in general referred to as simply the normal forex trading. Very less difference can be seen. In general cases a day trader is a person who makes several trades in a day, buying and selling a number of currencies. They are people who try to increase there profits by taking advantage of the small increase in the currency values. A forex day trade is similar to the stock market trades except that in the forex day trade traders trade currencies and not stocks. The major advantage of a forex market over stock market is that instead of traders investing and waiting for many years for there stock values to increase, here they just see there currency values increasing and decreasing over time. This allows them to make several trades within a day.

Forex day trading allows a trader to open an account for themselves for as less as 250$. The amount that is needed to open an account varies from one company to company. There are several agencies that have brokers mediating a firm or an individual to the market. Brokers are people who educate individuals and firms to work there way through the market. The work of a broker is to help traders to get through the market without suffering much loss. Certain forex agencies also provide traders with forex software’s. This software’s show’s the ups and down’s of the currency values in the form of graphs, chart diagrams and data flow diagrams. They are very efficient in bringing out the current statistics of the currencies. In a forex day trade currencies are often traded in fixed pairs, the main currencies traded being dollars, pounds, euros and yen. These are normally traded against dollars.

Only after the internet forex trading becoming so popular, was there an opportunity for even commoners to trade. Until then only co-operate firms and large financial institutions was able to trade in the forex market. Forex now has become so simple that certain traders have taken it as a hobby. With the help of the vast number of software’s available they are able to predict the changes in the market and make alterations in there trade accordingly. The forex day trading is similar to what is called as the future’s market. The advantage here is that the liquidity that is offered here is higher and the risk factor is lower due to the lesser investments. Forex can be a very serious carrier option for those who can invest high amounts and can play the market well. The profits that can be obtained depend on an individual’s skill and the experience that they have obtained by being in the market.



Theodore

Sacha Tarkovsky asked:


Perhaps the biggest myth of FOREX Trading is you can make money with day trading systems.

Day trading systems make money only for the people selling them and the investors who use them, simply lose their money and lose it quickly.

If you want to know why read on.

The Logic

Day trading logic is based around the fact that you can make money by predicting where prices will go in a day, or even a few hours.

The reality is:

All short term volatility is random, which is of course common sense to everyone but day traders.

Think about it:

You have trillions of dollars traded each day, by millions of participants all with different investment objectives.

The major groups can be summarized as follows:

Central Banks – Trading at key levels to push currencies up or down.

Large speculators – Looking to make money for themselves or for their clients.

Hedgers – Interested in offsetting risk.

Small speculators – Everyone else, who does not fall into the above groups.

How many of these pay attention to daily levels or ranges?

A tiny minority of losing day traders.

As volatility is random in short time frames and prices can and do go anywhere, using daily support, resistance or pivot points is a futile exercise.

So why do people buy these day trading systems?

Basically, because they have good sales copy and appeal to the greed of investors.

The only people who win are the vendors selling the system and they are of course not stupid enough to trade it themselves.

Don’t believe me?

Then ask for a track record of profits made over the longer term by vendors trading the system and you won’t get one.

What you will get is:

Maybe, some testimonials from friends or people who have had a lucky trade, or the favourite of day traders:

The Hypothetical track record.

This of course shows great profits, but there is a major problem:

A simulated hypothetical track record is done knowing the closing prices and is constructed in hindsight.

Let’s see, if I knew tomorrow’s closing price today could I make a profit?

Umm hard question, think I might be a multi millionaire!

The myth that day trading systems make money is one that novice traders fall for all the time – don’t make the same mistake.



Elizabeth