NEWSLETTER
Enter your email address below to subscribe to our newsletter.
Membership Benefits!
- Get Free Stock Picks in your email.
- Penny Stock Picks poised for growth.
- Well researched Best Penny Stocks.
- Hot Penny Stocks can make you rich!
- Get Growth Stocks.
Join now!
- Penny Stock Picks poised for growth.
- Well researched Best Penny Stocks.
- Hot Penny Stocks can make you rich!
- Get Growth Stocks.
Testimonials
"I have been geting stock picks from these guys for a while and they have been dead on for most of these stocks. Thanks for the great stocks."
John Daly
"Very helpful information in all the emails, and think these guys have the best stock picks from any other sites. Would recommend them to traders of all experience."
Jason Fink
Latest Articles
Day Trading Methods
Day trading is the buying and selling of stocks or other forms of security within a single trading day. It is most common in the foreign-exchange (forex) and stock markets but this can occur in any marketplace. While highly-speculative and risky, this practice is nonetheless legal and an ethical way of doing business. In fact, it serves two critical functions: keeping the markets efficient through arbitrage and providing liquidity, particularly in the stock market.
Day traders speculate on stocks that they feel will rise in price in the few hours, minutes or seconds that they own the stocks, affording them some quick profits. For an ideal day trader, all stocks purchased during the day must be sold, and all stocks that were sold short were covered, before the day’s end. Day traders typically use borrowed money (margins) to trade and usually will not risk holding stocks until the next day because of the danger of radical price changes overnight, which may result to irrecoverable losses.
To be a successful day trader, there are some requirements and methods that have to be in place. Among the requirements are access to the trading desk (usually reserved for traders working for larger institutions or those who manage large amounts of money) for instantaneous order execution; multiple news sources (as news provides the opportunities day traders capitalize on); analytical software with automatic pattern recognition or neural applications that make accurate predictions of future price movements.
There are various methods used by successful day traders. Shorting involves borrowing and selling of stocks, in the hope that the price falls during the day and the trader can repurchase the shares at a lower price. In trend following, the trader rides on the momentum of the price movement and buys rising shares or short-sells a falling one, in the expectation that the trend will continue until the trader disposes of the stocks.
Contrarian strategy employs just the opposite of trend following: the trader buys falling stocks or short-sells a rising one, in the expectation that the trend will change.
Range traders watch the support (high range) and resistance (low-range) prices of a stock for sometime, and then buy the stock at or near the low price and sells at the high range. Quite related to range trading is looking out for movements outside the established range, called breakout (price moves up) or breakdown (price moves down) - the trader buys or sells shares on the assumption that the movement will continue in that direction for some time. Scalping or spread trading involves exploiting the small price gaps created by the bid-ask spread – which means traders establishing and liquidating a position quickly, usually within minutes or even seconds. Rebate trading uses the ECN payment structure to trade low priced, high volume stocks to earn revenues in the form of rebates.
Experts normally advise market players against day trading because of the inherent high risk and volatility of the markets. Also, the NASD has separate rules for accounts classified as pattern daytrading accounts and requires a minimum equity of $25,000 for such accounts to trade in the stock market. However, due to the temptation of easy and quick bucks, many individuals and institutions engage in the practice and, yes, there are some who actually make a living in day trading.
Day traders speculate on stocks that they feel will rise in price in the few hours, minutes or seconds that they own the stocks, affording them some quick profits. For an ideal day trader, all stocks purchased during the day must be sold, and all stocks that were sold short were covered, before the day’s end. Day traders typically use borrowed money (margins) to trade and usually will not risk holding stocks until the next day because of the danger of radical price changes overnight, which may result to irrecoverable losses.
To be a successful day trader, there are some requirements and methods that have to be in place. Among the requirements are access to the trading desk (usually reserved for traders working for larger institutions or those who manage large amounts of money) for instantaneous order execution; multiple news sources (as news provides the opportunities day traders capitalize on); analytical software with automatic pattern recognition or neural applications that make accurate predictions of future price movements.
There are various methods used by successful day traders. Shorting involves borrowing and selling of stocks, in the hope that the price falls during the day and the trader can repurchase the shares at a lower price. In trend following, the trader rides on the momentum of the price movement and buys rising shares or short-sells a falling one, in the expectation that the trend will continue until the trader disposes of the stocks.
Contrarian strategy employs just the opposite of trend following: the trader buys falling stocks or short-sells a rising one, in the expectation that the trend will change.
Range traders watch the support (high range) and resistance (low-range) prices of a stock for sometime, and then buy the stock at or near the low price and sells at the high range. Quite related to range trading is looking out for movements outside the established range, called breakout (price moves up) or breakdown (price moves down) - the trader buys or sells shares on the assumption that the movement will continue in that direction for some time. Scalping or spread trading involves exploiting the small price gaps created by the bid-ask spread – which means traders establishing and liquidating a position quickly, usually within minutes or even seconds. Rebate trading uses the ECN payment structure to trade low priced, high volume stocks to earn revenues in the form of rebates.
Experts normally advise market players against day trading because of the inherent high risk and volatility of the markets. Also, the NASD has separate rules for accounts classified as pattern daytrading accounts and requires a minimum equity of $25,000 for such accounts to trade in the stock market. However, due to the temptation of easy and quick bucks, many individuals and institutions engage in the practice and, yes, there are some who actually make a living in day trading.
Featured Links
Copyright © 2008 zeba5 LLC