Article Categories
» Arts & Entertainment
» Automotive
» Business
» Careers & Jobs
» Education & Reference
» Finance
» Food & Drink
» Health & Fitness
» Home & Family
» Internet & Online Businesses
» Miscellaneous
» Self Improvement
» Shopping
» Society & News
» Sports & Recreation
» Technology
» Travel & Leisure
» Writing & Speaking

  Listed Article

  Category: Articles » Finance » Investing » Article

Day Trading Stock Online: Basic Techniques For Beginners

By David Jenyns

Day trading stock online is real seat of the pants stuff for all participants, but none more so than for the novice trader. The casualty rate is high enough amongst experienced professionals, but for the raw beginner it can be an absolute minefield if basic day trading principals arent rigorously adhered to.

Just because youve made a few successful mid to long term trades in your time doesnt ensure that youll be the next talk of Wall Street when you try your hand at day trading stock online. Far from it!

Not surprisingly, day trading irrespective of the asset class involved has been likened to extreme sports, with the only difference being that the thrills and spills are confined to the minute by minute fluctuations of your trading account. Perhaps the only saving grace for those who fail to plan their trades in advance is the fact that no positions are held open, i.e. carried forward, to the next day. If nothing else, this limitation helps prevent further erosion of capital when a trade turns sour.

So what motivates investors to become involved in day trading stock online?

A primary motivation of day trading stock online is understandably the lure of quick money. Another motivating factor is that it isnt necessarily any riskier than other forms of trading activity. However, unless thoroughly tested and proven trading strategies are put in place with each trade, the risk of incurring substantial losses within a frighteningly short period of time is all too real.

Basic Strategies:

There are six basic strategies day traders use to make a profit:
 Spread covering
 Technical trading
 Range trading
 Playing news events
 Trend following.

Spread covering refers to buying at the BID price and then selling at the ASK price. The spread is the difference between these two prices.

Technical trading is simply the action undertaken by a technical analyst. He or she evaluates securities by relying on the assumption that market data, such as price charts, volume, and open interest, can help predict future, usually short term, market trends. Unlike fundamental analysis, the intrinsic value of the security is not considered. Technical analysts believe that they can accurately predict the future price of a stock by looking at its historical prices and other trading variables. Many technical analysts are also market timers, who believe that technical analysis can be applied just as easily to the market as a whole as to an individual stock.

Scalping refers to an extremely quick trade for a small profit. For example, if you bought 20,000 shares in XXX Inc. @ $1 per share, i.e. $20,000 invested, then sold them 45 minutes later for $1.03 per share, $20,600 gross return,  you would end up pocketing a cool $600 less brokerage. NB: Remember that when you are day trading stock online, the round turn brokerage fees are minimal.

Range trading is a little harder and inherently more risky, but the returns can be proportionately greater, too! If you are canny enough to be able to pick the intra day market swings and either BUY at or near a low, then SELL at or near a high you can often make substantial profits using this method. But you do have to be wary, because if you buy into what you think is an intra day low point, only to discover that the market sentiment has changed and that a severe sell off is in progress, you could get badly burnt!

Playing news is the realm of the adrenaline seeking day trader. The technique refers to buying a stock which has just announced, for example, a short sell on bad news,  the contrarian traders love this sort of play as they will be standing in line to BUY the stock at the end of a short, sharp sell off in the belief that most if not all the bad news is already factored into the market and therefore there wont be any further downward pressure. The sheer volatility offered by unexpected news announcements can provide the diligent day trader with huge potential for quick profits, or losses if they call the market incorrectly.

Trend following assumes that if a stock have been rising steadily it will continue to rise. Admittedly, this technique is better suited to position traders, i.e. where stocks are held for a number of days, weeks or even months, but in strong bull markets some stocks will rise steadily for days on end, making the intra day trend follower a very happy chappy.

Live Coaching

When trading on an intra day basis you need to take into account many factors including: time of day; liquidity; pending announcements such as corporate profit reports, interest rate movements, currency fluctuations; macro and micro trends; market sentiment, in fact, almost anything at all that may have an impact on your trading results.

So, if you want to radically improve your day trading stock online skills, live coaching or even online mentoring with a recognized industry professional can be worth a hundred times the price paid. Coaching can take place in different forms including: in person coaching; online coaching session; or over the phone.

If youre hell bent on being successful, but youre still new to the game, youll be tossed to the lions unless youve acquired the necessary physical and mental skills to survive and profit from day trading stock online. Do yourself, your pride, your career and your bank manager a big favor by making the commitment to learn as much as humanly possible about this fascinating and potentially very rewarding form of investing, and secure the services of a live coach to see over your trading.

About the Author
Discover How Nicholas Darvas, A 25 Year Old Ballroom Dancer, Turned $25,000 into $2.25 million ... A Remarkable Trader, A Remarkable Amount Of Money And Remarkably Easy.

Article Source:
If you wish to add the above article to your website or newsletters then please include the "Article Source:" as shown above and make it hyperlinked.

  Some other articles by David Jenyns
How To Overcome The Hidden Perils Of Discount Online Stock Trading
If it sounds too good to be true, it probably is Unfortunately, that tired old cliche' applies to an alarming number of discount online stock trading brokerage operations not only in the US, but throughout the ...

Free Online Stock Trading Information Makes Trading Even More Profitable
Since the late 1990's, online stock trading has grown from humble beginnings into a burgeoning worldwide money making machine; and it's poised to get even bigger as advances in stock ...

Online Stock Trading Education: Why It Could Be Worth Millions To Go Back to School
'School, yes... but not as we know it, Jim.' What I'm talking about here is... 'Specialist coaching, mentoring ...

Online Stock Trading Strategies: The Shocking Facts
It's bad enough that just over 80% of all online investors lose money from day one. It's even more disheartening that only a small fraction of the remaining 20% ever make consistent profits over time. So, why ...

Online Stock Trading Software: 5 Trading Tools You Can't Afford To be Without
The advent of online stock trading software in the late 1990's - early 2000's precipitated a surge in stock trading ...

Tips For Online Stock Trading: 3 Surefire Ways To Maximize Your Profits For Minimal Outlay
Online stock trading can be the most profitable or most 'cash sucking' form of investing you can ever get involved in. It all depends on how experienced you are, and how you approach it. After ...

  Recent Articles
Making an offer on an Irish Property
by Clint Jhonson

How To Search California State Tax Lien Records
by Zach Parker

Buying a House at Auction is Very Good Investment
by Kotia Kot

The Future of Gaming is here, why the Video Game industry is reaching new highs.
by Jonel Cordero

All The Relevant Details About Remortgage Quotes Uk
by Turk Malloy

How Investment Property Helps You Retire Early
by Marian Rozwenc, PhD

How To Overcome The Hidden Perils Of Discount Online Stock Trading
by David Jenyns

Advantages of Long Term Investing and Compounding Interest
by Ohad Livne

When And When Not To Use A Stop
by Larry Potter

Passive Investing - How To Grow $250.00 to $250,000.00
by Gil Washington

Notary surety bonds preventing failure
by rick martin

Online Trading India - Investment at Kotak Securities!
by Tanya Lobo