Day Trading

The stock market is similar to either an auction or any other out-doors market or what some of us would call farmer's markets. Stocks are shares in companies. These stocks are sold based upon supply and demand. As in any auction there is an auctioneer and bidders who want the company's stock. Over a hundred years ago the auctioneer would have been a person standing in front of many potential bidders. These days in the computer age, a computer does the job of the auctioneer.

However, instead of shouting, we see the LCD print out of various stocks with the three or four letter symbols representing each company. Beneath in the huge stock market or stock exchange, on Wall Street there is several hundred broker's standing around bidding for dealer's like Global Maxfin Capitol Inc.

Or GMCI as it is referred to sometimes. If I wish to invest in a stock, I would go to GMCI who has already purchased stock, through his broker. This is the basics of understanding the stock market. However, there are those, especially since because of the internet, that bypass both the dealer and the broker and invest themselves.

Often times these people will put in a bid in the morning and "cash out" at or before the close of the day, this is known as stock market day trading, or more commonly simply day trading.

Stock market day trading became well known as a result of the computer age of the '80's and '90's. Many individuals found that they could do this online and so began to invest money and make literally thousands of dollars or more in just a few minutes. It is called day trading because it is done during the day.

As stated above you take a few minutes online and choose a few stocks that look good and even before breakfast invest in shares of stock that can range in price from a few cents per individual share to several dollars per share.

Later in the day after considering the movement in the market you select the right time and sell the stock that you purchased earlier that day. Even though the market does have movement during the night, you can rest easy knowing that you have sold your stock for the day and are risking nothing.

The next day you can either do the same as in the previous day and buy more stock or take a day off and not risk anything that particular day.

How much money you make all depends upon how many shares of stocks you have purchased. For example you purchased ten shares of IBM at $1.00 each and 100 shares of GE at the same price. Let's say that during that day IBM came out with a popular new monitor that was selling tremendously and that the CEO of GE was found to be criminally insane or another head of the company was embezzling money from the company.

Well that news would affect both companies' differently. The ten shares of IBM would close worth a lot more than $1.00, probably $ several dollars higher for example $20. Now instead of $10, you could easily sell it for $200; you have just made $190. It would end up just the opposite case for your GE shares, you may well loose thousands of dollars because the demand for the stock would all but disappear. This is the risk with stock market day trading; you don't know what will happen that day.

Day Trading |