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

Appraising And Insuring Your Jewelry

In the following article I will explain what to do in order to properly appraise and insure your jewelry. Unfortunately insurance companies will not accept this form of evaluation or appraisal, and certainly not after the fact. They ask if the appraisal can be done without seeing the jewelry or if it can be done based on their recollection of what it used to look like. Customers come to have estimates or appraisals done for their lost, stolen, or damaged jewelry.

I?ve seen it time and time again.

Creditable Appraisals

Insurance companies require that your jewelry policy be based on official and creditable appraisals done by a reputable jeweler. Jewelers that have studied or have been train by the Gemological Institute of America (GIA) will provide the most acceptable appraisals. Being trained by GIA ensures a conservative grading analysis and a correct evaluation of the jewelry?s worth. Most insurance companies do not require that you have your jewelry appraised by GIA graduates however; it?s always better to have one done by someone with these credentials.

Your appraisal should include the information regarding the precious metal content including it?s weight, karat purity, and color. The diamonds and gemstones should be described in terms of shape, carat weight, color, clarity, and cut grade. If the diamonds are pre-certified by a grading laboratory then you should give a copy of the certification to the appraiser and ask them to list this information on the appraisal. If possible have the appraiser photograph the items and attach this photograph to the appraisal when submitting to the insurance company. Always keep a copy in a safe deposit box or in a fire proof safe.

Jewelry appraisals should be reassessed every 7-10 years to determine if the value of the items has appreciated. Jewelry is a commodity and like all commodities they are subject to fluctuations in value. In recent years the value of certain diamonds have actually doubled in price because of shortages in the marketplace for high demand shapes and sizes. A loss after such a gain in value without proper reassessments will result in gaps in your jewelry coverage when trying to replace the item.

Choosing the Proper Insurance Coverage

The biggest mistake consumers? make is assuming that their homeowners insurance will cover them in the event of a loss. This could be further from the truth. The typical home insurance only allows $1500 - $5000 for personal articles and with that is a deductible of $500 - $1500. Along with that is the fact that some homeowners? insurance policies do not allow for loss of the item, damage, or diamond loss from the setting.

The best way to insure your jewelry is to get a personal articles policy written by your agent. This policy should include loss of the item, theft of item, damage, and loss of gemstones & diamonds. Ask your insurance agent to quote the policy with no deductible and with the above coverage. The going rate for jewelry insurance is $1.50 - $1.85 per hundred and if you?re quote higher then your probably paying too much. To calculate the annual premium take the appraised value of the jewelry and multiply is by the rate and then divide it by 100. Example (appraised value $10,000 X $1.50 = $15,000 Divide by 100 = $150 per year).

Some local insurance agents aren?t familiar with jewelry insurance policies and you may feel like you?re not getting the proper assistance. There are a couple of jewelry insurance companies that provide superior service and if your agent fails to give you proper assistance I recommend you give them a call. The two I like most are CHUBB Insurance and Jewelers Mutual. These companies specialize in personal articles policies and generally have the lowest rates with the best coverage. You can visit http://www.andrewsjewelers.com/ and you'll get more information on these companies.

Insurance is one of those things that you have to think about until you really need it. I will say though that a jewelry insurance policy makes a lot of sense. Let say you have a wedding set worth $5000 that you wear every day. How often do walk around with $5000 cash in your pocket? Almost never right? Well is some cases you walk around with the jewelry equivalent all the time. If you have valuable jewelry that you wear everyday then you are certainly increasing your chances of having an unfortunate loss. Jewelry valued at $5000 can cost as little as $75 per year to insure. It?s worth every penny to give you the peace of mind to wear it with pride and without worry.

Andy Moquin
Andrews Jewelers Inc. President ?
http://www.andrewsjewelers.com