Day Trading Knowing What To Buy And Sell

Trading stocks is pure and simple: jargon. It is the language used by the stock market and it only means that you are either buying something, or selling something. Of course, in the world of the stock market that something is usually technically nothing. Confusing? Not really. When you walk into the local grocery store, you buy “something”, the cashier takes your money and you walk away with an actual item in a bag. In the stock market you buy - stocks, that are nothing more than an entry on a computer, or you buy commodities, which are again, nothing more than an entry. Or, you buy futures, which is nothing that even exists yet- you have bought things that may or may not come to be, and you will never actually lay your eyes on any of it! The stock market is not bagging up piles of stock certificates and giving you frequent trading coupons.

So, you have looked over the market and you are confused about what exactly is available for you to trade- there are so many choices, after all. There are, of course, the traditional stocks, which are the investments that you make into a company. Each stock certificate is like a miniature title of ownership to that company. The money they make from the sale of their stocks is then reinvested back into the company by the managing board, ultimately strengthening the company. The company will sell only so much of their stocks to the public, and the rest will be held in trust by the governing boards so that they can keep control over the decisions that are made for the company.

Commodities are the actual item when referring to things such as corn, soybean, wheat and crude oil. A commodity trader is usually a big timer, so this is not a good choice for the beginning trader or even the more experienced day trader either. Commodity traders usually are of three types: the commercials, the large speculators and the small speculators. If commodities are the golden goose in your opinion, then consider forming a group of other traders to buy into the market. (This is still fairly advanced, and may not be a good idea for those that are more amenable to day trading.)

Futures is like the commodities market for various of reasons, but instead of buying shares of the profits from crops that are ready for market now, the futures trader buys contracts for crops that are not even in the ground yet. Futures is a risky market for a lot of reasons, most notably because not everything can be forecasted or foreseen.

Day traders can move hundreds of thousands of dollars on the currency market, and never once visit any of the countries that they are trading with. While the Forex market has slightly less stringent restrictions and guidelines, they are not totally rule-less and you should know the ins and outs of this very fast moving market before even trying your hand at it.

At least until you have made enough trades to be comfortable with the process, you should stick to straightforward stocks. Just getting the hang of the speed of the day trading lifestyle can be tricky enough; so do not complicate things needlessly.


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