Introduction To Day Trading

History of online day trading

Day trading was pretty much the domain of stock brokers and remained that way until the late 1990s, when the increasing popularity of the internet, motivated the international stock markets to move online. The birth of day trading was made possible when the computerized, over-the-counter NASD became available in 1971.

The consequence of this move was that day trading brokers became optional because anybody with Web access could execute their own trades, provided that they had an account with a registered online brokerage. The uptake was enormous, because by 1999, at least 25% of all trades made were done as online trading by individual investors. Day trading online grew in popularity as these investors started gaining online trading maturity. This growth found further impetus with the Dot Com Bubble as many traders could buy and sell the same share on the same day with three digit returns.

What is day trading?

The U.S. Senate Permanent Subcommittee on Investigations defines day trading as "Placing multiple buy and sell orders for securities and holding positions for a very short period of time, usually minutes or a few hours, but rarely longer than a day. Day traders seek profits in small increments from momentary fluctuations in stock prices after paying commissions."

With day trading it is common to focus on short-term trading, where a trade could last for anything between a couple of seconds to a couple of hours. In day trading online, the number of trades made may vary from between just a few to a couple of hundred per day. It is also common to finish the day with a closed overnight position. This means that everything you bought gets sold, before market close.

There are many different techniques or strategies that you can use in day trading. Some of the more common online trading systems include:

?Trend following
?Range trading
?Scalping
?Rebate Trading
?News Playing

One of the techniques that started surfacing in day trading is algorithmic trading. Algo, as it is commonly called, is favoured by hedge -, pension and mutual funds. It is estimated that 33% of all US and 40% of all UK trades during 2006 were made by algo traders. Algo trading is automated, meaning that the trader leaves it up to the computer to decide when to buy and sell.

Day trading can either be done by institutions or by individuals. Individual day traders normally make use of direct trading firms that offer them direct, real-time electronic access to stock markets. For a day trader real-time access is important because it enables them to have a ?live? view of movements on the Securities Exchange of those stocks, stock options, currencies, futures contracts, interest rate futures and commodity futures that they are trading online.

What are the pros of day trading?

?Self employment ? Day trading online offers you the potential to earn really good money and it goes without saying that you will enjoy flexibility in where and when you work.

?Stimulation ? Trading online is both exhilarating and interesting. It requires analytical thinking and continually challenges your abilities. Every day is a new start ? stagnation is not possible at all!

What are the cons of day trading?

Financing ? In day trading you need money to make money ? and lots of it. Day trading penny stocks could be high risk, so you will probably need to play in the bigger leagues, or at least find a happy (and profitable) balance between the two. There are also regulatory requirements around the amount of money you need in your account. In the US for example, it is $25,000.

Latent loss potential ? You are pretty much at the mercy of economy figures, analyst comments, interest rates, and so forth. A single press release or a single comment could turn a profitable stock into a dead loss. This makes your income unpredictable.

Day trading online can be highly profitable and produce rapid returns, in spite of being high risk. The risk is mainly due to margin use, and other day trading practices. Naturally, most risks can be managed if you remain prepared, alert and focussed. In example, when you start trading online, you will probably find that you have to exit a losing position very quickly, to prevent a loss. At the same time, you will need to move just as quickly to capitalise on any winning positions you may have.

Day trading online can be a fun and even profitable adventure, provided that you have good discipline, -risk and -money management.

What they can't do is give (people) the confidence to stick to those rules even when things are going bad." Almost anybody can make up a list of rules that are 80% as good as what we taught. "The key is consistency and discipline.

Richard Dennis, on Turtle Trading

Stock Trading, Day Trading & The Truth About The Stock Market

Did you know that the Large Mutual Funds, Money Managers, Broker Dealers, Hedge Funds, Market Makers, Specialists and Floor Brokers are the most active, successful, and profitable day traders

They can and do move markets, and in the process they make millions of dollars every day stock trading stocks with a good portion of that money being made off the backs of the uninformed individual trader and investor who blindly trades or invests in the stock market today. But that is exactly what they are. Most people are surprised when I tell them that. Yes, I said day traders.

in the markets today.

When it comes to stock trading or investing in stocks, most individuals are not at all prepared, or aware of what the Wall Street professionals have in store for them. And they are very good at what they do. Things like questionable analyst upgrades for companies that are clients of the brokerage firm that the analyst works for . . . so as to facilitate the selling of stock by company and corporate insiders at a higher price than normal by selling into the momemtum and price action created by the upgrade. I honestly don't know how some of these analyst can sleep at night, or how they can look at themselves in the mirror in the morning. But those are the facts, and it happens almost every day.

And, did you know about how the big players run and gun stocks, or tank them to make a killing off the underlying put or call options they had previosly loaded up on. Or how they manipulate the financial futures to manipulate stock prices, option prices, or the financial futures prices themselves so they can make large amounts of money, often at your expense. For every winner on a stock trade or investment, there has to be a loser. The market is a zero sum game. Is that loser you?

The truth of the matter is that the market is a game of money flow played by the big players as they move money around from stocks, to options, to financial futures, and back and forth in a number of different ways, all in the pursuit of greed and large profits. And remember, I previously mentioned that "a good portion of that money is being made off the backs of the uninformed individual stock trader and investor who blindly trades and invests in the stock market today."

Education is the key to the success of every indivdual stock trader and investor involved in the stock market today, witkout exception. The good news is that . . . once you learn the inner secrets of how you can trade and invest with them and not against them, like the pros do . . . you can confidently and consistently trade and invest in stocks profitably most days of the year, too.

Once you know what you are really doing, it is not uncommon to make $2,500 to $5,000 and more, per day. I have done it, and continue to do it when I trade. But if you don't know what you are doing, it is not uncommon to lose that kind of money, too. I feel very fortunate that I had the opportunity to learn from the same stock traders and investors you will meet on the pages of this site.

You can become a very successful stock trader and/or investor, but only if you are willing to invest the time and effort required educating yourself about the real workings of the stock market and how everything fits together. You won't find a better place on the internet to get the critical information you need to succeed.

If you are losing money in the markets today stock trading or investing, or not making enough money, it is time for you get out of the markets for awhile and sit back and try and analyze what you are doing wrong. If you are honest with yourself, you are going to realize that you really don't know what you are doing when it comes to stock trading and investing.

The best advice anyone can give you is to take a stock trading or investing traing course, either here or elsewhere, and find out what you should be doing. Some of these courses are not cheap, but the cost is really minimal when you consider the success you can have, and the money you can make in the stock market. You have to decide what you want to do. There is an old saying that goes like this "If you continue to do what you have always done, then you will continue to get what you have always got".

These are the same individuals that I originally learned from years ago, and yes there are many days when I make a lot more money than they do. They hold nothing back. There are free trading lessons, free trial offers, and comprehensive stock trading and investing courses from the most successful, market savy and knowledgeable traders and investors in the world. There are free trading lessons, free trial offers, and comprehensive stock trading and investing in today 's stock market.

Here at DowTrend.com you will find everything you need to know and learn to become successful at stock trading and investing in today 's stock market.

I sincerely believe you will like what you see. There is no one around to bother you. Take your time and check everything out.

Spend some time looking around this site.