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Day trading is defined as the buying and selling of a security within a single trading day. Day trading is a strategy for playing the stock market, where "playing" means trying to make money. Day trading is designed to produce short-term profits. Day trading is clearly a phenomenon of our times. Day trading is not appropriate for all investors. The profit potential of day trading is perhaps one of the most debated and misunderstood topics on Wall Street. Due to short time lines that prevent any company research or other traditional stock analysis tools, day trading is often regarded to as more like gambling than investing.

Day trading demands access to some of the most complex and sophisticated financial services and instruments in the markets. Trading with a stop-loss is extremely important for all traders to cut losses while they are still small, and to preserve their trading capital in case the market moves against their trade. Trading at certain times of the day is simply not profitable and in fact is highly risky. Day trading stocks, options, futures or forex is a challenging and potentially profitable activity for the educated and experienced investor, swing trader or day trader. There are those who engage in day trading without sufficient knowledge or training. In fact some will admit to trading only because it gives them a gambler's high. There are several different strategies that day traders utilize including: swing trading, arbitrage and “trading the news” among others. Giant Wall Street firms and hedge funds have massive trading desks that do this. Day trading involves taking advantage of price movements in stocks within one trading day. Day trading strategies demand the use of leveraged or borrowed money to make profits. Day trading used to be the sole preserve of financial firms and professional investors and speculators. However, day trading has become increasingly popular among casual traders due to advances in technology, changes in legislation, and the popularity of the Internet. Depending on one's 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.

Scalping is a trading style where small price gaps created by the bid-ask spread is exploited. The basic idea of scalping is to exploit the inefficiencies of the market when volatility increases and the daily trading range expands beyond what one would consider normal. Some day trading strategies (including scalping and arbitrage) require relatively sophisticated trading systems and software.

Traders that participate in day trading are called day traders. Traders work for themselves and on their own terms. Traders buy stocks, options, futures, or forex and try to sell them quickly in order to make a profit. Typically, day traders are well educated and well funded. These traders are typically well-established in the field and have in-depth knowledge of the marketplace. Most day traders who trade for a living work for a large institution. Day traders seek to make profits by leveraging large amounts of capital to take advantage of small price movements in highly liquid stocks or indexes. Day traders will typically close out all their positions by the end of the day, especially traders trading on margin or high leverage.

It is crucial that day traders have access to real time market quotes and activity because fluctuations in price can make or break a day trader if an order is delayed only seconds. Day traders must watch the market continuously during the day at their computer terminals. Many day traders use multiple monitors or even multiple computers to execute their orders. Day traders depend heavily on borrowing money or buying stocks on margin. Many day traders sell their positions before the market closes for the trading day to avoid the risk of price gaps (differences between the previous day's close and the next day's open price) at the open. Some day traders consider this to be a golden rule to be obeyed at all times. Because of the nature of financial leverage and the rapid returns that are possible, day trading can be extremely profitable (or extremely unprofitable), and high-risk traders can generate huge percentage returns (or huge percentage losses). It is commonly stated that 80-90% of average day traders lose money.

Day trading is about risk taking not gambling. Day trading is not a get-rich-quick scheme for the average person, even though some seminars do their best to promote it as one. Day trading is however a mentally and psychologically challenging activity and is by no means meant for everyone. If you can't be highly disciplined and stick by predetermined selling points, day trading is not for you.

Author Resource:-> Written by Larry Schade at Free Stock Trading, Day Trading, Options & Forex Trading Systems & Articles Directory | TradeLikeThePros.com on the topic of Day Trading
Article From Stock Trading, Day Trading & Investing Articles Directory

Stock Trading & The Truth About The Stock Market & Trading
Tip! You can mange both risk and stock trading fees with planning, and by making good choices. Your level of capital will be set by what you can afford, and what you are comfortable risking.

Did you know that the Large Mutual Funds, Money Managers, Broker Dealers, Hedge Funds, Market Makers, Specialists and Floor Brokers are the most active, successful, and profitable day traders in the markets today. Yes, I said day traders. Most people are surprised when I tell them that. But that is exactly what they are. They can and do move markets, and in the process they make millions of dollars every day stock trading stocks with a good portion of that money being made off the backs of the uninformed individual trader and investor who blindly trades or invests in the stock market today.

When it comes to stock trading or investing in stocks, most individuals are not at all prepared, or aware of what the Wall Street professionals have in store for them. And they are very good at what they do. Things like questionable analyst upgrades for companies that are clients of the brokerage firm that the analyst works for . . . so as to facilitate the selling of stock by company and corporate insiders at a higher price than normal by selling into the momemtum and price action created by the upgrade. I honestly don't know how some of these analyst can sleep at night, or how they can look at themselves in the mirror in the morning. But those are the facts, and it happens almost every day.
Tip! In other words, stock trading courses train people to do business with discipline, profitable plans and technical tools. They focus on vital and technical peculiarities of stock trading.

And, did you know about how the big players run and gun stocks, or tank them to make a killing off the underlying put or call options they had previosly loaded up on. Or how they manipulate the financial futures to manipulate stock prices, option prices, or the financial futures prices themselves so they can make large amounts of money, often at your expense. For every winner on a stock trade or investment, there has to be a loser. The market is a zero sum game. Is that loser you?

The truth of the matter is that the market is a game of money flow played by the big players as they move money around from stocks, to options, to financial futures, and back and forth in a number of different ways, all in the pursuit of greed and large profits. And remember, I previously mentioned that "a good portion of that money is being made off the backs of the uninformed individual stock trader and investor who blindly trades and invests in the stock market today."

Education is the key to the success of every indivdual stock trader and investor involved in the stock market today, witkout exception. The good news is that . . . once you learn the inner secrets of how you can trade and invest with them and not against them, like the pros do . . . you can confidently and consistently trade and invest in stocks profitably most days of the year, too.

Once you know what you are really doing, it is not uncommon to make $2,500 to $5,000 and more, per day. I have done it, and continue to do it when I trade. But if you don't know what you are doing, it is not uncommon to lose that kind of money, too. I feel very fortunate that I had the opportunity to learn from the same stock traders and investors you will meet on the pages of this site.
Tip! In stock trading you don't necessarily expect to be in a stock for the long run, but you are looking to profit form typically smaller short-term moves in a stock. In stock trading you are more like to use market timing meaning that you are seeking the best time to get into a stock and after that you are looking for the best time to get out.

You can become a very successful stock trader and/or investor, but only if you are willing to invest the time and effort required educating yourself about the real workings of the stock market and how everything fits together. You won't find a better place on the internet to get the critical information you need to succeed.

If you are losing money in the markets today stock trading or investing, or not making enough money, it is time for you get out of the markets for awhile and sit back and try and analyze what you are doing wrong. If you are honest with yourself, you are going to realize that you really don't know what you are doing when it comes to stock trading and investing.

The best advice anyone can give you is to take a stock trading or investing traing course, either here or elsewhere, and find out what you should be doing. Some of these courses are not cheap, but the cost is really minimal when you consider the success you can have, and the money you can make in the stock market. You have to decide what you want to do. There is an old saying that goes like this "If you continue to do what you have always done, then you will continue to get what you have always got".



Author Resource:-> Written by Larry Schade at Free Stock Trading, Day Trading, Options & Forex Trading Systems & Articles Directory | TradeLikeThePros.com on the topic of Stock Trading
Article From Stock Trading, Day Trading & Investing Articles Directory


Stock Trading - How To Pick Stocks For Stock Trading

I have found that the best stocks for stock trading and day trading are the stocks that make up the S&P 500. The reason for this is that the large Mutual Funds and large Institutional Buyers concentrate on these stocks in their never ending quest to beat the S&P 500. These stocks generally have strong relative strength and absolute performance to the S&P 500 Index. Of these stocks, I like to concentrate on those that are in the Nasdaq 100 Composite Index. It is the Nasdaq stocks that I like to trade the most because of their volatility.

Of the stocks in the Nasdaq 100, I concentrate on those stocks that I that I like to refer to as "trading where the action is" stocks. These are stocks that show tremendous volume in the number of shares being traded during the day, at least 15 million shares and preferably 20 million shares and more. My real preference is share volume of 30 million plus per day.

In addition, the stocks must have a large daily stock trading range, which is the difference between the high price and low price of that stock for the previous trading day, and a lot of volatility. I look for a trading range of at least $2.00 per share, but I really prefer those that are more volatile and have a daily travelling range of $3.00 to $6.00 and more.

The reason for this is that I trade both sides of the market, both the long side and the short side on an intra-day basis. I have no interest in whether the stock closed in positive, or negative territory the previous day, just as long as the volume and price action are there.

All I want is the price action, high volume and the volatility. If I have these three ingredients, I know that the major players are very active in that stock and they are either increasing, or decreasing their weighting in that stock. Adding to and contributing to the price and volume action are what I call the "accelerators", which are the momentum players, the program traders and the hedge funds who are trying to jump in ahead of the mutual funds and front run the stock, either up, or down. This is when the action really heats up and you will see "climatic volume" where each stock trade is occurring in less than a second. I have seen this many times every day. It happens all of the time.
Tip! Timothy Gorman is a successful Webmaster and publisher of Online Stock Trading Secrets. He provides more stock advice, information and ways to make money with stocks that you can research in your pajamas on his website.

One thing that may not be apparent to you on the surface is that what I have done when I pick stocks for stock trading is that I have used the major players as my research department. The money flow is very visible because most institutions are on the same page in terms of what they are buying and selling. This shows up in the price action, the volatility, and volume for the stocks in play. It is awfully hard for a herd of elephants to hide their foot prints in the sand.
Statistical Methods Of Stock Trading. Low Risk Short-term Stock Trading Strategies.

Now with a potential list of stocks to trade. I then load those stocks into my "stock trading" watch list . In addition to that watch list I have another watch list that contains every stock in the Nasdaq 100. When the market opens I spend the first 5 minutes or so, observing the volume, price action, and direction of the stocks in both watch lists.


I am looking for certain patterns to develop and if I see a pattern that I like to day trade, I will pull the trigger and take the trade, either on the long side or the short side based on what the stock (price action and volume) tell me, what I see the market makers doing on the Level II screen, and provided the stock is trading in line with the chart of the Nasdaq 100.
Tip! Stock trades were traditionally viewed as long term investments. So called 'blue chip' stock trading, ( those having proven value over numerous years ) will often form the basis of an investment portfolio.

I always have a fairly tight protective stop in place to protect me in case I am wrong and took the trade too soon. I may attempt that trade 2 or 3 times before I get the right entry, each time taking a small lose. But when I get the right entry, there is a lot of money to be made, especially when you are in the right stock.

One of the things I like to do is to stay with the same stock, as long as it satisfies my stock trading requirements. I may trade the same stock all week as along as it is performing for me and I am making good profitable trades with it. One of the benefits in doing this is that you really get to know the stock well, and how it trades.

To recap, in my opinion the best stocks for stock trading are those stocks with very high velocity and high volume, high volatility and a good intra-day travelling range. When you have these characteristics, you know the large institutions and the "accelerators" are involved in the stock.