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Why I’m a Day Trader since 1986?

You perhaps warned by your friends, relatives or stock market advisers that day trading is risky. However, from my personal experience, I found it is no more risky than long-term investment in volatile stock or futures provided you have right system in place. But, you should avoid any hot tips for day trading.

Day traders, are people who buy and sell stocks of various companies all day long. There are mainly two types of day traders – scalpers and momentum traders, Scalpers buys and sells very quickly whereas momentum traders buy stock that is moving up or down during the day.

The main objective of day trader is to maximize profit with minimum risk. As an active and experienced online day trader, I am sharing with you my recommendations so that you can be successful in day trading.

I would rather say investment in equity is always risky because of erratic and sometimes unpredictable nature of market forces. On the contrary, investments in banks allow money to grow at a small rate, while that rate is guaranteed, and the local government generally protects the money. However, you need to invest some portion of your capital in capital market for wealth building.

Let us examine why short term and long-term investment pose the same risk in terms of capital loss. We will consider a hypothetical scenario to explain the point. Let’s assume you are a value investor and invested in a company A. On 25th July’07, company A is opened at $27 in the morning, and then plummets to $24 within a few hours due to a large class action lawsuit being filed against them. If the company A goes to bankrupt because of said lawsuit, share of company A will fall drastically. In this situation, all kinds of share market investors will loose their capital because the stock is worthless now.

Stock pick based company performance is very crucial for value investors but in case of day trading technical analysis and related signal is most important. Most traders follow Fibonacci series to predict stock movement. Even in the above case, day trader might protect their capital well because they are normally very cautious and open to all kinds of market news and signals. Day traders mainly work based on market intelligence and their own day trading rules.

If you want to be a good day trader, you need to be disciplined, quick to learn from various situations, ready to take advice from your day trading coach. Having correct and timely information is extremely important to take any financial decision. Most day traders close their positions within the day i.e. they either sell or cover their short position. This is the major benefits of short term day trader is that the loss taken during one day is only for that day and it is not magnified over the next trading day. Day trading adds velocity to the money and smart investors always prefer to roll money in market so that they can pump in the money to a suitable opportunity. If you use latest stock picking software like Marl, you can find your winner stock very easily without any dependency on any consultants or day trading services.

If you want to be a day trader, you should know following:

1. Day traders typically suffer extreme financial losses in their first months of trading. Most of the new traders never graduate to profit-making status.

2. Day trading is an extremely demanding and expensive task.

3. Day traders depend heavily on borrowed funds or buying stocks on margin

4. Day trader should not believe advertising claims, which promise quick and sure profits from day trading.

5. Like all broker-dealers, day trading firms must register with the SEC and the states in which they do business. It’s necessary to check out day trading firms with your state securities regulator.

6. You need to work with an experienced day trader, need to learn latest techniques, use latest stock market investment software like "Marl", subscribe to online day trading tutorial and need to devise your own trading plan.

Your own strategy is the biggest secret of al successful day trader. This is true whether you are investing in equity or currency market.

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