Day Trading Guide
day trading? Day trading is the action of buying and selling the same
stocks, futures, forex or options over the period of one day. Actually, day
trading is about entering and exiting a position in a matter of minutes.
Entering and exiting all positions by the end of a trading session on Wall
Street. For the Forex market, forex day traders make sure all positions are
closed before the end of their individual market session. Many individuals want
day trade for a living.
Day traders refuse to hold any open positions when the trading day is over to
prevent from becoming an investor in any held position. Day Trading is a
business adventure and involves a skill that takes time to develop. Individuals
new to day trading must be prepared to take a loss because it is part of the
process. Day traders should never ‘not’ exit a trade when it hits their stop
loss just because they *think* the stock, futures, forex or options is going to
turn around – odds are against traders that the position will turn around. Odds
are traders will become investors in losing positions that they fail to exit per
their stop loss set in their trading strategy.
Day trading activity by day traders is processed through online brokers, per
individual account restrictions and requires access to instant trade. Real time
market data for stocks, futures, forex and options are a required tool of a day
trader. Day traders must also maintain connection to a reliable source of
analysis tools. While most day traders learn to lose with no preset loss amount,
those same day traders will likely lose more in early stages of day trading then
it would cost them to pay for professional day trader training or day trading
Who Day Trades?
Individuals who have access to disposable cash will open a trading account
with a broker. Disposable cash is not the college fund or a retirement fund.
Disposable cash is money that would not be missed, should the money be lost.
Broker/Dealers registered with NASD/NYSE require that day traders maintain
$25,000 minimum equity in their trading account on any one day that day trading
occurs. Margin trading requires a minimum $25,000 minimum. A key to success at
day trading is the ability to control trades, act and react to trading activity
with no emotions and above all, maintain their composure and disposition while
trading. Day traders should refrain from trying to day trade if they are ill,
having a bad day, depressed, sad or angry about anything. Most veteran and
successful traders make a trade by a simple method of ‘act and react’ on what
they see on a chart. Assistance is available for appropriate
chart settings utilized by successful traders.
Equipment Required to Day Trade
High speed Internet connection accompanied with a computer/laptop containing a
processor that can handle immense amounts of data downloaded from a day traders
online broker. Traders should have a computer used strictly for day trading so
as to avoid mistakenly downloading another program that conflicts with their
trading platform. For security purposes, day traders should run a quality
anti-virus program to secure their trading accounts. Day traders embarking on
the day trading business should test their trading system extensively to make
sure their computer can handle it. Day traders will need access to a reliable
trading platform and configurable charting software. Brokers charging cheaper
commissions should be compared with brokers charging higher fees. Cheaper is not
always the best route to go.
Demo-trading on a
demo-trading platform is the next best thing to flying lessons in a simulator
for the want-to-be pilot. By demo-trading, the want-to-be day trader is able to
develop their own individualized trading strategy. Day traders have the ability
to place demo trades on their trading platform based on the amount of trading
capital they intend to work with after they feel they have
long enough in order to practice the art of entering and
exiting a trade without
risking any real capital. Day traders try various day trading tactics and
continue to utilize those methods which show more winners than losers.
Traders will keep a diary for all trading activity while demo-trading to
track good and bad trades made. Traders will demo-trade only the amount of
‘disposable cash’ they intend to actually trade with, when they start trading
live. Traders with the desire to make a career at day trading must treat day
trading like a business, beginning with practice trading using a demo-trading