Day Trading – Potential Profits vs. Probable Pitfalls

Day trading in the stock market can provide you with a lot of thrills, excitement, and profits as well as bleeding ulcers and massive losses. Day trading is a fast-paced, high-energy, roller coaster investment ride.

As such, day trading is not right for everybody. You need not only savvy, but also a cast-iron stomach in order to succeed as a day trading professional.

What is Day Trading?

Day trading is a unique form of playing the stock market. Most investors purchase a stock for the long haul. The great investor Warren Buffett once said that his time frame for holding a stock was “life.” But people engaged in day trading are not investors at all – they are traders.

What’s more, even most traders are in a stock for at least a few days or weeks. Day traders typically hold a stock for less than one day, and in some cases, for only a few seconds!

The Objective of Day Trading

The objective of day trading is different from that of investing. Most investors put away money for retirement or for the future. Usually, they are working or have other source of income to fund their investments. Day traders engage in day trading as their source of income.

The major disadvantage of this is that investors allow their capital to accumulate, while people involved in day trading have to withdraw profits on a daily, weekly, or monthly basis in order to put food on the table.

For most, a successful day of day trading may net anywhere from $100 to $1000. Anything in addition to these amounts is icing on the day trading cake, but there are also the days when day traders lose money.

This is another major disadvantage of day trading as a profession. No matter how poorly you perform at your regular job, your boss never fines you $100 or $1000 on top of your day’s pay. This can happen frequently in day trading.

How Day Trading Works

Typically, a day trader will need to start with at least $10,000 in his trading account. Then he will usually place big bets on individual stocks, and hope for a 1-3 percent daily “pop.” One percent of $10,000 is $100; 3 percent is $300.

As you can see, anything less than $10,000 would barely yield enough income to survive, and contrary to popular belief, most day traders are not wealthy. In fact, one place where day trading is extremely popular is India, where traders who don’t even own computers use local internet cafes to place trades in the hope of making as little as $10 per day.

Pitfalls of Day Trading

In addition to the disadvantages previously mentioned, brokerage commissions are another major pitfall for day traders. Even at $7 per trade, a buy-sell combo would cost $14 – or 14 percent of a $100 profit. On top of that, there are taxes.

While long-term capital gains are taxed at a maximum rate of 15 percent, short-term trading profits (from stocks held for less than one year – an eternity in day trading) are taxed at the trader’s ordinary income tax rate. Even worse, if you’re engaged in day trading as your full-time job, you may be liable for self-employment tax (an additional 15.3 percent!) on your profits.

By the time Charles Schwab and Uncle Sam get through with you, not to mention Mr. Market, it’s almost impossible for you to make a profit – unless you are a day trading whiz.

Are You A Day Trading Whiz?

There’s only one way to find out – start trading – for real. Even paper trading does not properly prepare you for the real thing, since you won’t have the same emotional investment in your performance, and you won’t react, psychologically, the same as you would if your real money were on the line.

The good news is that if you establish a set of rules and stick to them, your potential for losses are minimized. Just because you sink $10,000 into your online brokerage account doesn’t mean that it won’t ever come out again.

And even when you dump ten grand into a single stock for a quick trade, what’s the most you could lose if you hold it for a day? Even the worst performers lose around 25 percent in a given day, and that only happens to a few out of the tens of thousands of stocks each year.

Your $10,000 should easily be able to buy you a great education, and even after commissions and losses, you should still have a good 3/4 of that money left by the time you decide whether or not day trading is for you.

About the Author

William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at
Day Trading
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Sudarshan Sukhani’s top picks for trade today

You can try Amibroker which is excellent for a beginner and also for professionals. It comes with many inbuilt charts to run it the way you want. It has a very simple programming language which is quite easy to learn and you can back test your trading ideas.

Another software is called Fibotrader which is FREE also can perform many technical analysis.

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Stock Trading

When the topic is about stock strategies, expect to hear something about stock trading. After all, it is where the bulk of money comes from. However, before we move on to the strategies concerning stock trading, let’s touch on the basics.

Stock trading is not literally trading of stocks. You won’t hear participants saying “I’ll trade my stocks in Nokia for your stocks in Motorola.†Stock trading is really buying and selling of stocks. It can be done either personally in the physical trading floor of a stock exchange or virtually in the stock exchange’s website. Although it sounds simple, it is not. Knowing the price of the stock is not enough.

This is where the stock trading tips come in handy.

1. Know your skills
Be your toughest critic. Just because you have the urge to try stock trading does not mean you are ready for it. Assess yourself. Are you prepared to trade? Are you confident enough to enter the world of stock trading? If not, don’t stop there. Take tutorials, read books, do trading exercises, then evaluate yourself again.

2. Have goals
If you are ready to become a master in stock trading, have a game plan. The first you have to include in said plan is your goals. Remember SMART? Make your objectives specific, measurable, attainable, realistic, and timely. For example, set a goal for your profit per share. Three dollars is reasonable.

3. Research
Do not go blindfolded. Do not even think of relying on blind faith alone. If you are interested in buying a particular stock, conduct a background study. Check if it is doing good in the market. Do this everyday or at least every time you want to participate in stock trading. The prices fluctuate. What’s doing well in the market now may be at the bottom tomorrow. Save yourself from losses.

4. Keep records
Invest on a stock trading journal and religiously update it. Experience is the best teacher, as they say. Learn from your stock trading mistakes. If you keep tabs on your victories, you have higher chances of an encore.

Loss is inevitable in stock trading. These strategies do not guarantee that you will not have your share of losses. Still, they can go a long way in minimizing the chances.

About the Author

This article was created to share and inform other writer and readers about stock trading and the different techniques.

360° Trading Experience – National Stock Exchange

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Auto Forex Trading – How Auto Forex Trading Software Tool Can Be Your Best Friend In Ensuring Your Success

Auto Forex Trading

With the availability of auto Forex trading software tool, Forex currency trading is becoming simpler and easier. These days, with the aid of such tools, Forex traders, whether beginners or experienced, can simplify this trade to make maximum profit.

The Forex exchange market is one of the largest and most active financial market in the world. Such investments involve mainly on the buying and selling of different currencies and trading volume these days can reach as high as 3 trillion dollars a day.

Whether you are an experienced trader or just a new beginner into the trade, you should invest in an auto Forex trading software tool which could bring you to the next level in this trade to gain maximum profit. This tool, together with your knowledge of Forex trading, will be able to help you make sound decision when doing transactions in the markets and strengthen one’s confidence. However, to get a Forex software that is reliable, it must have the following features. Auto Forex Trading

Ability To Provide Forex Trading Information

To be successful in the Forex trading, one needs the latest information about the trade and any news that may affect your trading. Therefore, an important feature that the software should have is that it must be able to provide the latest news and developments to the Forex traders. This way, traders can make the necessary adjustment or decisions when carrying out the transactions in the Forex trade. The software should also provide daily trade summaries as well as weekly trading summaries which will be very important. In addition, information such as economic happenings, interest rates, policy changes and financial calendars are also important.

The Auto Forex Trading Software Tools Must Be Able To Analyze

The Forex software must have provision for a mathematical model in analyzing the market data and must have to ability to perform basic tasks such as sampling, charting, simulations, decision-making, queuing and posses other types of analytical power. Auto Forex Trading

About the Author

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