Day trading is the same basic concept as any other type of trading with one major difference: day traders rarely hold a position with a stock overnight. Stocks are bought and sold in the matter of hours- hopefully for the trader with quick profits. Because of the very speed that these transactions are made, day traders risk more than more traditional traders do, and the stocks that they deal in tend to be more volatile and far more unpredictable. Within the world of day trading, there are several sub-types and each has its own advantages and disadvantages and should be investigated thoroughly.
Although day traders do trade on many markets, with many types of financial products, they do the vast majority of their high speed trading online. In fact, the days of the Wall Street market scene are falling away, as more of the trading is being done on a huge computer network. NASDAQ is completely electronic now, while the NYSE only does a portion of its activities online. To remain competitive it will have to move more and more of its trading action to the computer networks and allow the brick and mortar of Wall Street fade away into historic glory. The world is moving far too fast for the traders to remain competitive if they are not able to move as fast as the slowest computer- the traders that can adapt will succeed, the ones who cannot will retire, hopefully with a nice nest egg.
Day traders have a reputation, even among other financial professionals of the rebel, the cowboy or the renegade. While it is true that many day traders do not do as much actual research before they buy a stock, they must still know enough about a stock’s performance or expected performance to make a profit or they will not last long in this unforgiving field. For every failed day trader, there are countless others ready to saddle up and take the chance to make their fortune and their names on the back of a few quick, but good trades.
Whether taking on day trading as a hobby or a career change, there are many things to be aware of, including what you think makes your personality suited for this change. The casual trader should know just as much as the professional about types of trades, trading and the markets themselves. No matter who you are or how many trades you make per day, you should know what the risks involved are and the easiest way to get started. And the one constant thing, across the board, for both the casual and the professional trader is the ease that you can make these trades now- with the computers and computer software, literally anyone can become a day trader with little problem and a minimal (cash) investment.
Before you get to the amount of cash that you need to have to invest in the trading market, you need to consider a few other facts as well. Will you be doing your trading on your home computer? Is your system up to the task at all? How well can you expect to do as a day trader if your system is hopelessly out of date and miserably slow? Will your computer crash just as you are ready to make a huge trade? By the time your computer comes back online, will you have missed out on a golden opportunity?
Updating your computer system makes sense, not only if you are going to be using it to make a living, but also to keep your software up to speed, as it would be of no use to download state of the art software on a computer that moves too slowly to make much use of it. Don’t waste time on the top of the line computer, with solidly recommended software if you are going to limp along with dial up. Your best bet? A well made laptop computer, good software and a Wi-Fi connection so that you can keep up with your trades anywhere that you want to go.
Computing did not breed the day trader, but it has made it not only more common, but far more lucrative. Because you can make countless, simultaneous trades from a single computer screen, you have increased your chance of making a profit in equal amounts. Of course, just having the equipment and the desire still does not make you ready to trade, nor are you even ready to start talking initial investment
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