Day trading, as the name suggests, means trading-buying and selling-the stocks on the same trading day. The trading positions, usually though not always, are closed before the market closes for the trading day.
Day trading is different from after- hours trading where the trading activity continues even after the regular marketing hours when the stock exchange closes.
Sellers and buyers who participate in day trading are called day traders. Although day trading evokes the image of a hectic trading activity in course of the trading day, it may not be so in actual practice. You may make several trades, say a dozen, in course of a trading day, or, you may limit yourself to just one trade.
You may, in some cases, just buy a stock on one day and sell it on the next day, if you think that selling it on the same day would not prove profitable. There is no legal restriction such as that you must finish off your trading activity the same day. You may, at the most, have to pay some differential on brokerage if you carry your trade to the next day.
In standard practice, traders usually tend to close their trading positions by the end of the same trading day. In any case your trading frequency depends entirely on your trading strategy for that particular day, or, your general trading style and outlook.
There are traders who focus on very short or short term trading. They finish off their trades in a matter of few minutes or even seconds. Such traders buy and sell several times a day and usually their trades consist of high volumes. They are the favorites of the brokers who reward them with big discounts on commissions.
Some traders, however, do not hanker after reduced brokerages. They focus on momentum or trends of the stock movement. They are very patient during their wait for a strong move, which may occur during the trading day. Obviously such day traders make only a few trades.
There are traders who prefer to sell off their stocks before the close of the market day to avoid the risks arising out of the price gaps between the closing price on the day they bought a stock and its opening price on the next day. They consider this practice as a golden rule and follow it almost religiously.
Other traders believe in allowing the profits to run so they stay with the position even after the market closes.
As said earlier, the number of trades you make on a trading day depends upon your trading style or trading strategies.
Profits and risks in day trading
Day traders make quick bucks and also quick losses in a matter of minutes or at the end of the trading day. Day trading may evoke the visions of gamblers gaming in casinos. There is, however, a marked difference between day trading and gambling.
While, you cannot make any calculated moves or devise any intelligent strategies in gambling, except when you are out to cheat others, day trading involves very serious understanding of the process of trading.
You study the general market trends and the movement of the stocks. You make fundamental and technical analysis and keep yourself abreast of the latest news flashes about the stocks of the companies that you trade in and much more.
Day trading is not playing a blind man's buff or just throwing away a dice. You have to be very alert and cautious before every move. It would, therefore, be unfair to call day traders gamblers or bandits as some frustrated losers in day trading are apt to do.
Experienced and intuitive traders generate huge percentage of returns from day trading. Some stock traders manage to mint millions per year solely on the day trading. A large number of persons have successfully made day trading a sole avenue of making their livelihood.
This, however, is not to deny the risks of huge losses in day trading. Those who trade without a calculated and intelligent strategy and discipline are more likely to incur huge losses in day trading. This happens more with those who use borrowed funds, a practice known as buying on margins. They have to pay back the borrowed amounts with huge interests and other penalties if fail to make profits. This is what makes day trading really risky.
Friday, May 2, 2008
Make Money Online
You've heard all the stories about regular people like you and me pulling down six-figure incomes from the Internet. These people have no special business or marketing training, didn't start off with a large amount of capital, and don't spend 20 hours per day working on their enterprises. In fact, it seems that they're able to make money online without expending very much effort at all. Understandably, you want in on the action. What's their secret?
Well, there are actually lots of different ways to consistently -- and legally -- make money online. For example, if you have a product to sell, it would be very easy to get set up at a few different auction sites. Thousands of people make a full-time living just from running auctions. Even if you don't have a product to sell, you can still make money online. Many people get their start from putting up a simple website and filling it with affiliate links that generate a commission every time a visitor clicks on the links. Of course, you would have to have some kind of content on the website or it's not likely that visitors will keep coming back to it.
If you're a bit more adventurous, you can try to make money online from various investment programs. You can either hook up with a program that is already in place, or strike out on your own. Some of the existing programs out there consist of private investor's clubs and HYIPs. A private investor's club is a group of people who pool their capital together in order to invest it in various financial markets. Usually, one or more of the members is a licensed broker or seasoned analysts, so the investments are both savvy and mid- to low-risk. The major drawbacks to a private investor's club is that you have to be invited by a current member in order to join and you usually have to provide a significant investment up front.
HYIPs are another vehicle that regular people have used in order to make money online. A HYIP is a high-yield investment program, and is based on some of the same principles as private investor's clubs. With HYIPs, however, membership funds are used to invest in very risky prospects that can either go bust or pay off handsomely. Most HYIPs are open to any and all comers, so you don't need to know anyone in order to join.
In order to make money online from your own investment know-how, you can sign up with an e-trading firm and trade stocks, bonds, and futures all day long with just a few clicks of your mouse.
These are just a few of the innumerable ways to make money online. You can decide to pursue one of the avenues mentioned above, or turn your own original idea into a gold mine. Either way, you're sure to be able to find a niche that will allow you to generate a steady primary or secondary income stream.
Well, there are actually lots of different ways to consistently -- and legally -- make money online. For example, if you have a product to sell, it would be very easy to get set up at a few different auction sites. Thousands of people make a full-time living just from running auctions. Even if you don't have a product to sell, you can still make money online. Many people get their start from putting up a simple website and filling it with affiliate links that generate a commission every time a visitor clicks on the links. Of course, you would have to have some kind of content on the website or it's not likely that visitors will keep coming back to it.
If you're a bit more adventurous, you can try to make money online from various investment programs. You can either hook up with a program that is already in place, or strike out on your own. Some of the existing programs out there consist of private investor's clubs and HYIPs. A private investor's club is a group of people who pool their capital together in order to invest it in various financial markets. Usually, one or more of the members is a licensed broker or seasoned analysts, so the investments are both savvy and mid- to low-risk. The major drawbacks to a private investor's club is that you have to be invited by a current member in order to join and you usually have to provide a significant investment up front.
HYIPs are another vehicle that regular people have used in order to make money online. A HYIP is a high-yield investment program, and is based on some of the same principles as private investor's clubs. With HYIPs, however, membership funds are used to invest in very risky prospects that can either go bust or pay off handsomely. Most HYIPs are open to any and all comers, so you don't need to know anyone in order to join.
In order to make money online from your own investment know-how, you can sign up with an e-trading firm and trade stocks, bonds, and futures all day long with just a few clicks of your mouse.
These are just a few of the innumerable ways to make money online. You can decide to pursue one of the avenues mentioned above, or turn your own original idea into a gold mine. Either way, you're sure to be able to find a niche that will allow you to generate a steady primary or secondary income stream.
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