Day traders are drastically different than the traditional stock broker or trader. Day trading is just what it sounds like, making 1 day or short-term investments to quickly make money in the stock market. Until all of the wonders of the internet took flight, being a day trader from home was nearly impossible and your financial future lay solely in the hands of a broker. Now, with a little bit of time and knowledge, people can make money from home by day trading stocks, if a few key concepts are kept in mind.
LEARNING THE ROPES
To be a success at anything, it helps to have an idea what you are doing. Take the time to research stocks online and look at their trends and Price to earnings ratios. You will find that some stocks are long-term investments, while others should be sold before the week is out. If a company is producing a new product, splitting, buying out another company, restructuring its leadership, or conducting massive layoffs these are key indicators as to whether to buy or sell. It’s really a simple concept, buy low and sell high. The key is DO YOUR HOMEWORK!!! If most people are jumping ship, but you think a company is solid and you understand how they make money wait until you think the stock price has hit rock bottom and buy. Conversely, if you think a stock is hot SELL, SELL, SELL don’t get greedy. This is all the investment advice we give out. We are NOT investment advisers, day trading is very risky. If you would like specific advice on picking stocks go to www.buylikebuffett.com . After learning how to pick stocks use online trading companies that allow you to use fake money to pretend trade while you are learning the ropes. Do it!
People waste a good deal of money on expensive online tutorials needlessly. Today there is a wealth of knowledge with minimal effort for free out there, and also take time to review strategies, blogs, etc. that are listed on various broker websites.
COST PER TRADE
Many of the online traders offer a cost per transaction option and some offer a cost per unit or cost per stock option. These are typically about $10/transaction or $0.006/stock. This means that if you are trading 1660 or less units of a stock it is cheaper for you to use the per unit cost. Some people may be purchasing 50000 shares of a penny stock, though, and find the $10.00 transaction fee a better deal.
Do not try to switch back and forth between options. Instead figure out what you are going to do more of, and do it. If a few months later you find that switching tactics is in your best interest, switch at that time.
WORK WITH YOUR HEAD
The stock market may be influenced by emotions, but that doesn’t mean your trading should be. Take advantage of stop loss and other tools offered by your online brokerage and stick to your guns to make money day trading. Letting the herd affect your decisions or riding something out because you feel “pot committed” will almost always work against your best interest.
Successful traders know what to look for to make a quick profit daily by researching the market, spending time and money wisely, and keeping tempers and passion out of the arena. Following these basic ideas will put you on the track to successful day trading.