Day Trading

What is day trading?

Day trading is purchasing and selling a stock within one day, this does include both pre-market hours and after-market hours.

This does not include either buying or selling one stock and doing the other portion of the deal the next day, this would be overnight trading. Day trading is mainly done with stock, and forex (foreign exchange currencies), although there are other forms. Pattern day trading is day trading over a period of more than 4 days in any one period of time.

Pattern day trading in the stock market is very risky and is restricted by the government to those who have and can maintain an account of over $25,000.

However, day trading is not as risky with forex and several other types of exchanges. Thus there is little or no restrictions on these types of trading, day or otherwise. What type of person is a day trader? Is there more than one kind of day trader?

Types of professional day traders There are two types of professional day traders: Institutional and Individuals. Institutional day traders work in an institution and use the company's money and computer equipment.

These people tend to make more money, just because they have access to a large amount of money to invest and can use high tech, computers to access the internet and can use analytical software.

Individual day traders often do investing as a business, or they invest their own money. These professionals don't have the resources for direct competition with the institutional day traders. Hence, they use of various methods of analyzing the market and using other methods to assist them in making profits.

Characteristics of day traders: professional day traders have several characteristics in common that make it easier for them to profit from day trading.

Enough money to invest Day trading is nothing like working at McDonald's or any other day job. Day trading, like most other investments, are risky,( though some are riskier than others), and require not only large amounts of money ($25,000 in the stock market, $10,000 for some other company's), but it should be money that is available to risk without much worry. This really helps to take the fear of losing the money out of it. Thus done correctly, this can be much more than gambling away money.

Wisdom and experience: day trading, especially in the stock market, takes a long time to learn and the wisdom that comes from watching others and doing it yourself.

Discipline: discipline is most important when it comes to investing. There is the discipline it takes to get up and do it everyday, instead of quitting after a month or two or even after learning a little bit about it. There is also the discipline to "hang in there" until a stock changes position, which can take a long time sometimes.

Strategy: Day traders, who have done it for a while, develop a strategy and use it to decide when to buy and sell.

These are some of the characteristics of day traders, whether institutional or otherwise professional.

Day Trading |