Day Trading Online
Day trading online differs form other forms of online trading in the sense that it involves trading with short investment horizons. Online day traders hope to make quick profits off daily fluctuations in stock prices. Day traders will hold onto stock for a couple of minutes to a couple of hours, but will never hold onto their stock overnight.
Day trading can typically be divided into different styles. Momentum day trading involves identifying trade performance patterns throughout the day in an attempt to buy when stocks are down and sell when prices are up. Momentum traders may hold onto stock for a couple of hours to an entire day. By contrast, scalping day traders hold onto stocks for only minutes or seconds. Scalpers make their money by earning a miniscule profit on each share that they have bought by selling it at precisely the right moment. Scalping is more popular than momentum trading because it typically involves less risk.
Due to its instability, the NASDAQ Stock Exchange is the most popular choice with day traders. The volatility of the NASDAQ markets is perfect for scalping as stock prices can rise or fall substantially in just a couple of seconds. Other markets like the NYSE do not provide day traders with the volatility that they need to make a profit.
Online day trading is designed for those with nerves of steel. If you prefer to do your own trading, you will need to trade through an electronic communication network system. Prepare yourself for the fact that you are almost certain to lose money while you learn the markets. Even after you become more familiar with daily fluctuations and patterns there is still a chance that you will suffer great losses due to the volatility of day trading markets. If you are set on day trading online, it may also be to your advantage to keep in mind the following tips:
• Before you launch into the markets, test your skills on a trading simulation website such as eye4money. Trading virtual money will give you a good idea of how you would fare were you trading with real money.
• Decide precisely how many stocks you want to buy, what you are willing to spend and the type of strategy you are going to use. Simultaneously, decide on the maximum loss you are willing to suffer before you even begin trading and stick to it. The biggest mistake many novices make is to assume that day trading does not require any kind of advance planning.
• Do not try to spread yourself too thinly- it's a recipe for disaster. Rather focus all your attention on one or two stocks and trade carefully.
• Don't attempt to use momentum strategies unless you are certain as to when to exit the market you are trading in.
• If the markets do not perform the way you expect them to on any given day, cut your losses and save your capital for another day.
• Pay no attention to tips and advice on so-called day trading websites. When it comes to online trading, free advice is usually false advice.
• Finally, observe, observe, observe. Whichever style of trading you use and whatever market you tap into, you will not be successful unless you constantly do enough research. Learn about different market analysis techniques and trading styles and analyze markets carefully and constantly. Taking online trading courses and doing online tutorials is a good way to expand your knowledge.
Online day trading may be advertised as an effortless and quick way to make money, but in reality it is actually just like anything else in life - to succeed requires commitment and hard work. Do yourself a favor and keep in mind the old saying "if it seems too good to be true, then chances are it is!"