Day Trading - Thinking about earning your living DayTrading?
During the heady .com days prior to 2001, (when Bush became president,) there were stocks, 3 or 4 times a week that went up from 30 to 200% a day. It was possible, if you knew what you were doing, to check before the market opened to see which stocks were running in real time and why. And, if you then had a fast electronic brokerage system you could dive into the market, buy a bunch and sell them the same day.
About 1% of people doing this consistently made money.
I saw one private individual make a million in one day shorting Corel.
And then there was somebody who lost a bunch hanging on too long to the WWWF IPO. As a matter of fact the bottom line is that if you take inflation into account you'd have been better off putting your money in an old sock since 2001. So what to do?
Should you give up on the Stock Market, let alone give up on DayTrading?
Don't give up on the Stock Market, if you use the right system which is a simple set of formulas you can still make 30% or more on your money annually. Using this simple system $11,000 left in the market for 17 years would be worth more than one million dollars today.
But it is not DayTrading and you still would need a strong stomach to sit out these 17 years, because some of those years would give you negative returns. The bottom line is this - if you want to DayTrade there is only one way to do this today. And that is with ABSOLUTELY MINDBLOWING News.
MINDBLOWING News looks something like this:
XYZ corporation finds cure for cancer. ABC Inc invents Eternal Life Pill DreamCar Corp invents car that runs on water.
You get the idea, in order to make money off of Daytrading you need to have big news.
Also You MUST get this news BEFORE most other people get it. How to do this: For about $10 a month you can get a subscription to real-time market news. Get your Real Time Market News at about 6 AM Eastern Standard Time. Say you find the real time news that a company has invented a car that runs on water.
Check the time the news was first released, making sure that news item was not available yesterday. Buy the stock now with money that you can afford to burn ALWAYS USING A STOP LOSS.
Most electronic brokerage firms today allow you to buy stocks on NASDAQ only as early as 6 AM EST. Sell the stock at 9.28 AM EST to all the traders that are waking up. You could conceivably double your money. So would you then trade again in this stock after the market opens officially? No,I would not.
Too many mindgames will be played by market makers during the first day with the stock that produced the mindblowing news. Remember the statement above: "There have been very few days since 2001 that any stocks actually went up more than 30% in one day, the oomph has disappeared from both the Nasdaq and the Dow."
Never hold the mind blowing news stock overnight, because people in most cases will dump it on the second day. One more tip: Never buy IPO's on the first day. The most touted IPO(meaning almost all large brokerage houses were praising this IPO to the sky) cost people the most in decreased value on the second day after the IPO came out.
Who were the winners? The brokerage houses.
So, if you have money to burn, have a cast iron stomach and want to watch market news from 6 AM to 9.28 AM EST, DayTrading may be for you.
Remember, you can make the big profits from Day Trading, you can also lose a large part of your capital in one day. Never invest more than 30% of your net worth in Day Trading.
Day trading the stock market involves the rapid buying and selling of stocks on a day-to-day basis. This technique is used to secure quick profits from the constant changes in stock values, minute to minute, second to second. It is rare that a day trader will remain in a trade over the course of a night into the next day. These trades are entered and exited in a matter of minutes.
The main question that most people ask when it comes to day trading is simple: "is it necessary to sit at a computer watching the markets ALL day long in order to be a successful day trader?"
The answer is no. Itís not necessary to sit at a computer all day long. There are a number of factors to consider, but generally the rule of day trading is to trade when everyone else is trading. In other words, trade in the morning.
As with all financial investments, day trading is risky - in fact, itís one of the riskiest forms of trading out there. The stock prices rise or fall according to the behaviour of the market, which is entirely unpredictable. Day traders buy and sell shares rapidly in the hopes of gaining profits within the minutes and seconds they own those particular stocks. Simple to do in theory, harder to do in practice.
If you are constrained by a small amount of capital, you may not be able to buy large amounts of a stock, but buying only a small amount can add to the risk of a loss. And, obviously, it is impossible to predict with certainty which stocks will result in profits and which in losses. Even the best of traders must learn to accept both outcomes.
Itís also important to know that in day trading, it is the number of shares rather than the value of shares that should be the focus. If you day trade, you WILL face losses, but even for the more expensive stocks, the loss should be marginal, because prices do not usually fluctuate to an extreme degree over the course of just one day.
The day trading industry deals in a large variety of stocks and shares. Here are just a few:
- Growth-Buying Shares - shares made from profit, which continue to grow in value. Eventually, these shares will begin to decline in price, and an experienced trader can usually predict the future of this type of share.
- Small Caps - shares of companies which are on the rise and show no signs of stopping. Although these shares are generally cheap, they are a very risky investment for day traders. Youíd be safer to go with large caps and/or mid-caps, which are much more secure and stable thanks to a premium.
- Unloved Stocks - company stock that has not performed well in the past. Traders buy these shares in the hopes of generating profits if and when the stock rises in value. As with small caps, unloved stocks can be a risky choice for day traders.
These examples are NOT your only options when it comes to day trading stocks. The best way to determine which type of stock is right for you is to invest some time for careful research, a knowledge of market patterns, a solid strategy, and a disciplined trading plan.
The key to successful day trading is to be prepared. Know as much as possible about the industry before you begin actually trading. You need to learn to trade ONLY when the market gives the right signals, and ONLY when the volume of activity in the market supports a successful trading opportunity.