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Day trading stock online is real seat of the pants stuff for all participants, but none more so than for
the novice trader. The casualty rate is high enough amongst experienced professionals, but for the
raw beginner it can be an absolute minefield if basic day trading principals aren't rigorously
adhered to.
Just because you've made a few successful mid to long term trades in your time doesn't ensure
that you'll be the next talk of Wall Street when you try your hand at day trading stock online. Far
from it!
Not surprisingly, day trading irrespective of the asset class involved has been likened to extreme
sports, with the only difference being that the thrills and spills are confined to the minute by minute
fluctuations of your trading account. Perhaps the only saving grace for those who fail to plan their
trades in advance is the fact that no positions are held open, i.e. carried forward, to the next day. If
nothing else, this limitation helps prevent further erosion of capital when a trade turns sour.
So what motivates investors to become involved in day trading stock online?
A primary motivation of day trading stock online is understandably the lure of quick money.
Another motivating factor is that it isn't necessarily any riskier than other forms of trading activity.
However, unless thoroughly tested and proven trading strategies are put in place with each trade,
the risk of incurring substantial losses within a frighteningly short period of time is all too real.
Basic Strategies:
There are six basic strategies day traders use to make a profit:
Spread covering
Technical trading
Scalping
Range trading
Playing news events
Trend following.
Spread covering refers to buying at the BID price and then selling at the ASK price. The spread is
the difference between these two prices.
Technical trading is simply the action undertaken by a technical analyst. He or she evaluates
securities by relying on the assumption that market data, such as price charts, volume, and open
interest, can help predict future, usually short term, market trends. Unlike fundamental analysis,
the intrinsic value of the security is not considered. Technical analysts believe that they can
accurately predict the future price of a stock by looking at its historical prices and other trading
variables. Many technical analysts are also market timers, who believe that technical analysis can
be applied just as easily to the market as a whole as to an individual stock.
Scalping refers to an extremely quick trade for a small profit. For example, if you bought 20,000
shares in XXX Inc. @ $1 per share, i.e. $20,000 invested, then sold them 45 minutes later for
$1.03 per share, $20,600 gross return, you would end up pocketing a cool $600 less brokerage.
NB: Remember that when you are day trading stock online, the round turn brokerage fees are
minimal.
Range trading is a little harder and inherently more risky, but the returns can be proportionately
greater, too! If you are canny enough to be able to pick the intra day market swings and either
BUY at or near a low, then SELL at or near a high you can often make substantial profits using this
method. But you do have to be wary, because if you buy into what you think is an intra day low
point, only to discover that the market sentiment has changed and that a severe sell off is in
progress, you could get badly burnt!
Playing news is the realm of the adrenaline seeking day trader. The technique refers to buying a
stock which has just announced, for example, a short sell on bad news, the contrarian traders
love this sort of play as they will be standing in line to BUY the stock at the end of a short, sharp
sell off in the belief that most if not all the bad news is already factored into the market and
therefore there wont be any further downward pressure. The sheer volatility offered by unexpected
news announcements can provide the diligent day trader with huge potential for quick profits, or
losses if they call the market incorrectly.
Trend following assumes that if a stock have been rising steadily it will continue to rise. Admittedly,
this technique is better suited to position traders, i.e. where stocks are held for a number of days,
weeks or even months, but in strong bull markets some stocks will rise steadily for days on end,
making the intra day trend follower a very happy chappy.
Live Coaching
When trading on an intra day basis you need to take into account many factors including: time of
day; liquidity; pending announcements such as corporate profit reports, interest rate movements,
currency fluctuations; macro and micro trends; market sentiment, in fact, almost anything at all that
may have an impact on your trading results.
So, if you want to radically improve your day trading stock online skills, live coaching or even
online mentoring with a recognized industry professional can be worth a hundred times the price
paid. Coaching can take place in different forms including: in person coaching; online coaching
session; or over the phone.
If youre hell bent on being successful, but you're still new to the game, you'll be tossed to the lions
unless youve acquired the necessary physical and mental skills to survive and profit from day
trading stock online. Do yourself, your pride, your career and your bank manager a big favor by
making the commitment to learn as much as humanly possible about this fascinating and
potentially very rewarding form of investing, and secure the services of a live coach to see over
your trading.
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Article Source:
http://EzineArticles.com/?expert=David_Jenyns
==== ====
Penny Stock Trading Can Be Very Lucrative. You Can Make Huge Returns on Cheap Penny
Plays. Click on the link Below
http://pkbagorio1.stockpromo.hop.clickbank.net
==== ====