Day Trading is seen by many people as a way out of the daily grind of having to get out of bed to go to a job and make good money at the same time, which is most people’s goal. But while there are a lot of advantages to day trading, there can also be pitfalls that you need to avoid.
The good stuff : You can work when you want, you have no boss on your case, you can dress how you like, take breaks when you like, take time off when you like, spend more time with your family and friends, you don’t need to get yourself to work, you just fall out of bed and you’re there.
You have time to do what you want when YOU want to do it and, if you get it right, you can make a stack of money!
The bad stuff : You have to discipline yourself to do the job properly and not take silly risks, you have to learn when to get out of a trade (not necessarily right at the top), and if you’re losing you need to know when to cut, because if you get this wrong, you could lose everything.
You must only use money that you can afford to lose. Day trading is just another form of gambling, but if you work at getting it right, the rewards can be fantastic.
You can find a lot of help and information on the Internet, and while some isn’t very good, a lot is excellent. There is also software available to help you to trade more safely and even free software that allows you to simulate trading. You would be wise to try this first before you invest your hard earned cash.
Nov 4, 2008
How To Select A Stockbroker
To get the best returns in the stockmarket, one needs to select a good broker. This article is a 5-step guide that tells what to look for when selecting a stockbroker. It will save you time and potentially a lot of money by helping you avoid the traps and pitfalls for the unwary.
To help you get the best returns from your trades, you will need a good broker. I would recommend staying away from online brokers and those offering discount brokerage and instead focus on finding a good traditional broking service.
It will cost more per trade but believe me, this will be a small price to pay for better order execution and service rendered. A good broker will always get you in and out of the market at better prices that an automated online system and will be there for you at all times. And this will make a difference to your profits. Here’s a few rules on what to look for when selecting a broker.
5 Steps to Selecting a Quality Broker:
1. Must specialize in the market you are going to trade. Ask them how long they’ve been transacting on the particular market and what their level of experience is. Give preference to a broker that’s been around for at least 10 years and seen some ups & downs.
2. Must allow Contingent Order placement. That is, allow you to place a buy stop, stop limit, stop loss and take profit orders that are triggered based upon the price action of the stock. Since the last few years, a lot of brokers have finally caught up and begun offering this facility. Don’t ever trade without it.
3. Must execute your orders at all times exactly as specified by you, without a question. You should decline advisory service your broker may want to offer you as it can cloud your judgment. You want a broker that transacts, not questions your orders.
4. Must be reachable by telephone at all times during working hours. On the occasion, you may need to contact your broker by phone to discuss matters that would otherwise be lengthy via email. Make sure you only deal with a broker who is happy to be there for you, at all times, and can be reached when needed.
5. Must not be a friend or relative. Keep your relationship with your broker professional. That is, your broker should probably not be your cousin or close friend. The reasons are obvious.
To help you get the best returns from your trades, you will need a good broker. I would recommend staying away from online brokers and those offering discount brokerage and instead focus on finding a good traditional broking service.
It will cost more per trade but believe me, this will be a small price to pay for better order execution and service rendered. A good broker will always get you in and out of the market at better prices that an automated online system and will be there for you at all times. And this will make a difference to your profits. Here’s a few rules on what to look for when selecting a broker.
5 Steps to Selecting a Quality Broker:
1. Must specialize in the market you are going to trade. Ask them how long they’ve been transacting on the particular market and what their level of experience is. Give preference to a broker that’s been around for at least 10 years and seen some ups & downs.
2. Must allow Contingent Order placement. That is, allow you to place a buy stop, stop limit, stop loss and take profit orders that are triggered based upon the price action of the stock. Since the last few years, a lot of brokers have finally caught up and begun offering this facility. Don’t ever trade without it.
3. Must execute your orders at all times exactly as specified by you, without a question. You should decline advisory service your broker may want to offer you as it can cloud your judgment. You want a broker that transacts, not questions your orders.
4. Must be reachable by telephone at all times during working hours. On the occasion, you may need to contact your broker by phone to discuss matters that would otherwise be lengthy via email. Make sure you only deal with a broker who is happy to be there for you, at all times, and can be reached when needed.
5. Must not be a friend or relative. Keep your relationship with your broker professional. That is, your broker should probably not be your cousin or close friend. The reasons are obvious.
Day Trading – What Is It?
Day trading is basically the buying and selling of stocks over a relatively short period of time, sometimes minutes. It was once only available to floor traders and investment banks but now the Internet has made day trading accessible to anyone with a computer system. There is good money to be made (and lost) using this method.
As an example, a day trader might buy 1000 shares of stock A at 10:00 as the price begins to move upwards on good news, then sell it at 10:04 when the stock price has risen (for example, by $0.50). The day trader would make $500 profit, less his commission which with today's low commission rates of around $30 or less per trade, that's a nice $440 or better, excluding taxes.
Day trading usually follows one of two approaches, either beating the spread or attempting to catch short term trends. The spread is the difference between what is being offered for a stock (the bid) and the price being asked for the stock (the ask). With spread trading, you attempt to buy at the ‘bid’ and sell at the ‘ask’ as many times as possible. Spread traders can make hundreds of this type of trade every day.
ECNs or Electronic Communication Networks are a recent development. They are completely electronic exchanges with very low commissions and very fast execution of orders. As a method of encouraging traders to use their networks, some ECNs offer incentives in the form of a rebate. In some cases, this can allow a day trader to make money simply from buying and selling a stock at the same price.
Day trading can be very profitable if you get it right, but you need to research as much as possible and take advantage of the free simulation software that is available for you to practice with before you take the plunge. Remember, day trading isn’t for the faint hearted!
As an example, a day trader might buy 1000 shares of stock A at 10:00 as the price begins to move upwards on good news, then sell it at 10:04 when the stock price has risen (for example, by $0.50). The day trader would make $500 profit, less his commission which with today's low commission rates of around $30 or less per trade, that's a nice $440 or better, excluding taxes.
Day trading usually follows one of two approaches, either beating the spread or attempting to catch short term trends. The spread is the difference between what is being offered for a stock (the bid) and the price being asked for the stock (the ask). With spread trading, you attempt to buy at the ‘bid’ and sell at the ‘ask’ as many times as possible. Spread traders can make hundreds of this type of trade every day.
ECNs or Electronic Communication Networks are a recent development. They are completely electronic exchanges with very low commissions and very fast execution of orders. As a method of encouraging traders to use their networks, some ECNs offer incentives in the form of a rebate. In some cases, this can allow a day trader to make money simply from buying and selling a stock at the same price.
Day trading can be very profitable if you get it right, but you need to research as much as possible and take advantage of the free simulation software that is available for you to practice with before you take the plunge. Remember, day trading isn’t for the faint hearted!
Invest In The Stock Market – For Beginners
If you have a little extra cash and are trying to figure out the best way to grow that money, you might have considered investing in the stock market. You hear how all of these people have made thousands or hundreds of thousands of dollars doing it, and it sounds intriguing.
You also hear that people just spend a few minutes here and there doing it, and still make all of this money in just a short amount of time.
You work hard for your money, but would love to find a way to make more, especially without the hard work. But how can you invest in the stock market? It may seem daunting, especially when you don’t know anything about it.
The key is that you shouldn’t do anything until you learn a little bit about the stock market. If you blindly throw money into it, you’re bound to lose it. Losing your hard earned money because you didn’t know exactly what to do is not what you want to happen.
How can you learn how to invest in the stock market then? The good news is that it doesn’t take too much time to learn the basics. There are many websites that will teach you what you need to know before you invest at all. There are also many books that were written just for people like you, beginners who want to invest, but don’t know where to begin.
Once you have read some of these books, or gone to some of these websites, you’ll know the basics, and will then be able to put your money in the stock market, and know that you have a good chance of making money instead of just putting your money in randomly and just hoping that it works out.
The good news is that with all the available help out there, before you know it you will become an expert in the stock market, how to invest in it, and know exactly what you want to do – and what you are comfortable with investing. Then you can be like everyone else, checking the stock prices every day, to see how well you did!
You also hear that people just spend a few minutes here and there doing it, and still make all of this money in just a short amount of time.
You work hard for your money, but would love to find a way to make more, especially without the hard work. But how can you invest in the stock market? It may seem daunting, especially when you don’t know anything about it.
The key is that you shouldn’t do anything until you learn a little bit about the stock market. If you blindly throw money into it, you’re bound to lose it. Losing your hard earned money because you didn’t know exactly what to do is not what you want to happen.
How can you learn how to invest in the stock market then? The good news is that it doesn’t take too much time to learn the basics. There are many websites that will teach you what you need to know before you invest at all. There are also many books that were written just for people like you, beginners who want to invest, but don’t know where to begin.
Once you have read some of these books, or gone to some of these websites, you’ll know the basics, and will then be able to put your money in the stock market, and know that you have a good chance of making money instead of just putting your money in randomly and just hoping that it works out.
The good news is that with all the available help out there, before you know it you will become an expert in the stock market, how to invest in it, and know exactly what you want to do – and what you are comfortable with investing. Then you can be like everyone else, checking the stock prices every day, to see how well you did!
Where Can I Learn About The Stock Market?
If you want to learn about the stock market, there are many places you can do so. The good news is most of them are free; so you will be able to learn and keep the money you saved for investing!
One of the easiest ways to learn about the stock market is by getting a book that is a basic investing book. You can either buy it, or get it out of the library for free.
Here you will learn the basics such as the difference between a stock, mutual fund, and bond, and how the whole stock market process works. It’ll tell you everything you need to know, and probably won’t take too long to read.
If you want even more information, you can just go online. There are many websites (that are free) dedicated to teaching others about the stock market, and about investing. They’ll also give you all of the basics, as well as teach you about any advanced investing terms you would like to know about.
One of the best ways to learn about the stock market is to watch it in action. Take a look at a stock ticker on TV during the day, or look at one online. You can also listen to the radio at a business station, and see how things work. You’ll hear that as bad news comes out about a specific company, their stock will go down. Or you might hear that oil prices are going up, so lots of stocks are going down. You’ll be able to see how little things affect the stock market, and how prices change because of it.
If you spend some time watching the stock market, especially after having read about some of the basics, you should have learned enough to be able to get ready to invest on your own. You can then start researching specific companies (if you want to invest in stocks), or mutual funds to see how their history has gone.
By looking at how things have gone, and what is going on with the stocks or mutual funds now, you’ll be able to see if you are interested in investing in it, or if you should find something else to invest in.
Once you have done all of that, you’ll start to realize that you know quite a bit about the stock market, and will be able to start investing on your own! You’ll feel confident, and will be able to pick what stocks or mutual funds you are interested in, and be able to invest with confidence.
One of the easiest ways to learn about the stock market is by getting a book that is a basic investing book. You can either buy it, or get it out of the library for free.
Here you will learn the basics such as the difference between a stock, mutual fund, and bond, and how the whole stock market process works. It’ll tell you everything you need to know, and probably won’t take too long to read.
If you want even more information, you can just go online. There are many websites (that are free) dedicated to teaching others about the stock market, and about investing. They’ll also give you all of the basics, as well as teach you about any advanced investing terms you would like to know about.
One of the best ways to learn about the stock market is to watch it in action. Take a look at a stock ticker on TV during the day, or look at one online. You can also listen to the radio at a business station, and see how things work. You’ll hear that as bad news comes out about a specific company, their stock will go down. Or you might hear that oil prices are going up, so lots of stocks are going down. You’ll be able to see how little things affect the stock market, and how prices change because of it.
If you spend some time watching the stock market, especially after having read about some of the basics, you should have learned enough to be able to get ready to invest on your own. You can then start researching specific companies (if you want to invest in stocks), or mutual funds to see how their history has gone.
By looking at how things have gone, and what is going on with the stocks or mutual funds now, you’ll be able to see if you are interested in investing in it, or if you should find something else to invest in.
Once you have done all of that, you’ll start to realize that you know quite a bit about the stock market, and will be able to start investing on your own! You’ll feel confident, and will be able to pick what stocks or mutual funds you are interested in, and be able to invest with confidence.
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