Day trading is defined as the buying and selling of a security within a single trading day. It is daily, online stock trading with very short investment timeframes. Those who do this day in and day out are traders, not investors.

Because of the high profits (and losses) that day trading stocks makes possible, Day trading is often regarded as more like gambling than investing. In truth day trading is about risk taking not gambling.

Day traders work from their homes or offices. With their eyes glued to computer screens, a day trader may execute over a hundred trades a day.

But they typically do not hold stocks overnight. In fact, they may

hold stocks for only a few seconds to limit risk.

A day trader will usually sell their positions before the stock market closes for the trading day to avoid the risk of price gaps between the previous close and the next open. Some day traders consider this to be a golden rule to be beyed at all times. Other traders believe they should let the profits run, so it is acceptable to them to stay with a position even after the stock market closes for the day.

For example,at 10:00 AM a day trader might buy 1000 shares of stock just as the price begins to rise, then sell it at 10:04 AM when it is up by 1/2 ($0.50). The day trader makes $500, minus commission of about $29.95 or less per trade, that is a quick $440.00 or so, excluding taxes.

Many day traders focus primarily on the NASDAQ. It is typically more volatile than the NYSE or AMEX, so it offers more opportunities to play the intraday price waves and troughs. Volatility however also carries high risk,in the time it takes to grab a cup of coffee, a stock may move 1/2 point or more.

To some, day trading is just a numbers game. They do little research and just watch for moving stocks with good spreads. Others are more scientific about it, relying on news and technical analysis to catch intraday price changes.

Depending on your trading style and strategies, the number of trades made in a day may vary from one, to dozens or more. Some day traders manage to earn millions per year solely by day trading stocks.

Day trading has become increasingly popular among casual traders due to advances in technology, changes in legislation, and the popularity of the internet. In the past, the tools for day trading stocks were available only to professionals. But thanks to the power of the Internet, everything you need to get started is now conveniently available online.

When you are ready to start day trading, you will need to choose a trading system such as the one I recommend on my website (see Authors Bio).

This course consists of two volumes and two exercise books, which will teach you everything you need to know, even if you have never traded stocks before in your life. The new second edition has been completely revised for 2008, and includes even more detailed examples, refined trading strategies and online access to a set of in-depth training videos.

Day trading is not a get-rich-quick scheme, it is a mentally and psychologically challenging activity and is by no means meant for everyone.

Day trading has become a popular vehicle for (attempting to) create or maintain wealth. Every single day, thousands of new Day Traders emerge from the sidelines, primed and ready for action. They eagerly seek to learn day trading success strategies used by the Master Traders.

However, when a new or a struggling day trader begins to investigate and explore the world of Trading, in an effort to make their own dramatic entrance or to improve on their results, they are confronted by a world full of seemingly insurmountable challenges and obstacles.

But these new and/or struggling Traders don’t realize that MOST of these obstacles are myths.

And because they fail to recognize this, these new or struggling Traders typically fall prey to one of the 5 Great Myths of Trading:

1. Day Trading always requires massive capital accounts, both to learn, and then to execute a Day Trading Strategy.

It is true that in many cases you do need massive capital up front in order to step into the Trading arena, depending on where you learn trading, and what investment vehicle you choose to trade. But it certainly doesn’t HAVE to be.

In fact, it’s possible to secure an excellent Trading education AND fund a trading account with as little as $3000.

This is a little known fact among newbie Traders – they assume they’ll need to have at least $25,000 to open a trading account, on top of the $10,000+ they paid an “expert” to learn a trading system.

2. Day Trading always requires countless hours spent chained to your computer, staring at stock charts.

The stereotype of a Day Trader is someone who spends ALL DAY LONG glued to their computer screens, staring at stock charts, waiting for indicators to tell them its time to make a move.

And in large part, this stereotype is justified, because this is true of most Traders. These Day Traders will literally spend HOURS, if not ALL DAY LONG at their computers trading.

They use Trading as a means to escape the corporate rat race… only to find themselves in a J-O-B of their own creation.

But it doesn’t have to be this way. In fact, it is entirely possible to be an incredibly efficient and successful Trader while trading for just a few minutes a day – if you know how.

3. It takes months (or even longer) to learn and fully grasp a “successful” day trading strategy

Like the other myths, this one CAN be true, and IS true of many (most?) traders. The reason for this is most traders use technical trading systems and strategies.

The primary problem with these technically strategies is actually the topic of Myth #4 (to follow) – but suffice it to say that technical trading systems will take months to learn, and involved hundreds if not THOUSANDS of “practice trades” before you can possibly be ready to start trading “live” (i.e. with real money).

And when you DO go “live”, that doesn’t mean that you’ve fully grasped the trading strategy. In fact, it will be months or even years after going “live” before you likely have a firm handle on your technical trading strategy or system.

But like the other Great Trading Myths, it doesn’t HAVE to be this way.

In fact, it is possible to learn certain trading strategies and be ready to successfully implement them in a matter of weeks, or even DAYS.

If you know what these ultra-efficient strategies are, and where to find them.

4. You need a PhD in Advanced Statistical Theory in order to trade successfully.

This myth is a little bit “tongue in cheek”, but you no doubt understand the concept here. Many day traders typically employ a Technical trading style, which involved the use of statistical probability formulas and other highly complex technical indicators.

New traders see the level of complexity often involved with technical trading or “trend trading”, and are so intimidated by it that it keeps them from ever trying learn day trading.

Also, most people who try to learn technical analysis will struggle and eventually fail, because it IS so complex, and the technical indicators can often be very ambiguous.

The extreme complexity of technical trading systems may be the single biggest factor that prevents new traders from entering the Trading Arena.

5. You don’t need to learn how to trade from a professional – you can just teach yourself.

Of all of the 5 Great Trading Myths, this one runs the most rampant, and is responsible for destroying the overwhelming majority of trading accounts.

If there is one thing that new Traders need to understand, and that struggling or failed Traders understand all to well, it’s this:

You are going to have to pay for your trading education, one way or another. You can either pay to learn how to trade from a Professional, OR you can pay the Market.

And the market is a much more cruel, and a much more expensive instructor than nearly any Trading professional that will teach you how to trade.

Those Traders who want to try to “figure out how to trade” all on their own, with maybe the help of a book or two, will quickly discover that this is absolutely true.

The Market loves to dine on the trading accounts of inexperienced and uneducated day traders. Don’t let YOUR trading account become an afternoon snack for the Market.

When you are finally ready to learn day trading, explore the various options available to you before settling on any specific day trading system or strategy.

Author: Christopher Call
Article Source: EzineArticles.com
Provided by: Electric Pressure Cooker

Day trading or same day trading is a unique and popular concept among stock players who trade with the aim of making quick profits. Day trading is an attractive option for all stock traders for having the potential of incurring huge profits if traded wisely and calculatingly.

There can be two types of day trading. The first is the delivery-based day trading where the trader takes delivery of the shares and hold on to them till he gets favorable rates to dispose them off at a profit. The second type is the same day buying and selling without even taking delivery of shares. On an average, it has been noticed that market are about 2-3% volatile on a daily basis. The day traders take advantage of this market movement to extract profit out of their chosen shares.

It has several advantages. Trading can be done even with a small amount. There is no need of huge investments. So it suits every pocket. Moreover, you get return on your investment daily and do not have to wait for profits. So you can constantly roll your capital without blocking it.

It is however a risky business. The profits extracted out of day trading are not huge as the market move on a limited scale on a daily basis. In order to reap high percentage returns, one usually has to hold on to the shares and wait for sometime with a long-term horizon, which is not possible for day traders.

It is also easy to lose money in day trading and the strategy is not as easy as it seems. The biggest hurdle that a day trader faces is that he does not know when to enter and exit the market. The stock prices need constant monitoring and day traders need to sit hooked up to the computer screens for hours. Investors also make the mistake of not using the stop-loss order strategies to minimize their chances of losses. Thereby they fail to protect their money from these daily short-term market movements. These traders also make the mistake of holding on to their stocks overnight with the aim of finding an opportune time the next day when the markets open once again, to sell them off and make up for the losses. But this way they do not comply with the basic principle of day trading. The concept of day trading came into vogue because traders were interested in selling off their shares the same day. This practice is generally encouraged as it protects the stocks from the market movements triggered by happenings beyond the official trading hours when the market remains closed.

There are several types of day trading styles. These styles are implemented by the different traders to suit their specific personalities as well as their specific needs. Day trading might be short term trading in which traders hold their position only for a brief time period that ranges from a few seconds to minutes. This practice is also known as scalping. Day trading might also be in the form of swing or position trading in which the positions are held for the entire trading day. Thus day trading can be very flexible and offer a wide range of options. Most day traders would simply stick to a particular style but sometimes they might just go in for a mix of styles mostly depending on the market and general economic scenario prevailing at a particular point in time.

Day trading also has different trends of trades: Trend trades, counter-trade trends and ranging trades. Trend trade happens in the direction of the price movement, for example, buying of shares when the prices are moving up and counter trend trades happen against the direction of the price movement, that is, selling of shares or stocks when the prices move up. Ranging trade move back and forth between two prices and is usually practiced when the market is moving sideways. Traders adopt different trends depending on the market situation.

Even though the primary goal of every day trader is to make profit out of a single day and look for opportune moments for trading, they might differ in their strategies. Some traders might try and take advantage of each and every market fluctuation and trade several times a day. On the other hand, there might be traders who would wait throughout the day trying to gauge the best market situation to conduct a trade and might end up with just a single trade in one complete day.

Author: Micheal James
Article Source: EzineArticles.com
Provided by: PCB Prototype & Manufacturing