Day trading online
THE WORLD OF THE DAY TRADER
The online day trader is after one thing : the quick kill. But the day trader's job is much different than people think. Day traders are not investors, they are traders. It means that long term trends and market conditions do not concern them. Reading The Wall Street Journal cover to cover to not their job, nor is studying graphs, charts and research. None of these things will put food on their tables. Neither will listening to brokers and analysts nor knowing every fact, rumor and tidbit about the market. In fact, day traders may not even know anything about the stocks they trade. They may not even know the names or lines of business of the companies because they do not have to. In this game, knowing too much will not help you, it will hurt you.
This is the short term and the only thing day traders should be concerned about is the next five minutes. Yet, they know exactly what they are doing. Every trade they make a profit and to get out, as quickly and as safely as possible. Welcome to the world of the day trader.
PREPARING THE UNINITIATED FOR THEIR FIRST TRADE
It is often said that the market will humble those who do not respect its power. There are many day traders who enter the financial arena for the first time without having any respect for or real understanding of the system or of the risks that are involved. These people will only last so long before the market inevitably crushes them. Before you risk even a single penny of your trading capital, you must understand what you are getting yourself into. Good day traders can make literally tens of thousands of dollars in a single day. But any time you can make that kind of money, there is also the chance, however slight, that you can lose that kind of money as well. Most likely, this will not happen, but if you let your guard down, beware! You have to proceed cautiously.
THE GOLDEN AGE OF INTERNET DAY TRADING
We live in a very special time. The internet has changed the way we work, live and interact. The flow of information is faster today than at any time in the history of the world. And no where is it faster than in the financial markets. The stock market of today is a far different place than the stock market of five years ago. We are witness to a revolution in the world of finance that began only a short time ago. The general public is fascinated with the stock market. As a society, we cannot seem to get enough: The sheer numbers of financial Web sites, online trading firms and news shows devoted to the markets stand as testament to this. Over the last few years, the bull market in stocks has made investing a dinnertime topic in many middle class households for the first time. The investing obsession is now forever ingrained in mainstream America. And the internet has played a huge role. The result is that the individual investor is much more educated today than ever before. The necessity of depending on stockbrokers for advice and information is fast becoming a thing of the past. More and more each day, people are taking financial matters into their own hands. And, while the old paradigm is fading into the background, a new breed of speculator has emerged: the online day trader.
This is the backdrop for the explosion in online trading that has occurred in the last two years. There are now over 80 online brokerage firms competing for the 5 million individual accounts that now trade actively over the internet.
In many regards, this is a golden age for internet day trading. In today?s world, conditions are ideal for the day trader. Low commissions, a fair regulatory environment and technology that allows someone in Alaska to have the same split-second financial information as a trader on the floor of the New York Stock Exchange are but a few of the reasons. Thanks to the internet, information travels so quickly and efficiently that the day trader can witness and react to tiny, second-to-second price fluctuations in stocks that in the old days would go unnoticed. This enables day traders to make quick profits in less time than it takes to make a phone call, allowing them to capitalize on opportunities created by markets that can change drastically in just a few seconds.
It has not always been this way. For decades, the world of stock trading was dominated by a select few on Wall Street. The best and most profitable traders all held seats on the New York Stock Exchange. In the past, this was a necessity. These insiders had a virtual monopoly on financial information. Markets moved too fast for those who did not have the same access to quick trades and timely information that the floor traders had. If you were not on the floor of the exchange, you were on the outside, plain and simple. To make matters worse, only a privileged few could afford the high price of owning a seat. Day trading required a tremendous amount of money and resources just to compete. And the paying field was not level. The individual investor did not stand a chance in this environment. That is why, back then; the idea of the individual day trader competing on the same field with the Wall Street giants was unheard of.
In those days, the high commissions alone prevented most individuals from doing any stock trading. There was no such thing as discount brokers: Full-service brokerage firms were the only means for the individual to invest.
The trading strategies outlined encompass a wide area of the universe of stock speculation.
Introdution to day trading
The day trader?s job is to grind out throughout the course of the trading day. This is done by buying stocks and reselling them for profit minutes - even seconds later. By limiting their risk and only trading when the odds are favorable, day traders can make thousands of dollars per day on these tiny profits, regardless of whether the stock market is up, down or flat.
As a day trader trading form home over the internet, you must realize that there are much faster players in the market place than you. These people have faster executions and better access to market moving information, putting you at a substantial disadvantage when mere seconds are the difference between winning and losing trades. To make a living at this game, you must utilize trading strategies that eliminate this inherent edge the faster players have.
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