I want to become a day trader using Power Etrade. What exactly does a bid price mean and an ask price mean? Do I buy it at the ask price and sell at the bid price? If so, I don't understand. Or do I not even worry about those things and just worry about the current trade prices. Say I were to buy AAPL today. It's close was $64.95. Would I pay that? Say it went up to $80 tomorrow, would I sell it at that?
Being a Financial Planner, it always makes me uneasy when someone says they want to be a day trader. I have a client that caught that bug back in 1998. He had a little early success so he quit his engineering job and traded full time. Two years latter (when I met him) he had lost a boatload of money, to the extent that he had also rung up $30,000 in credit card debt using cash advances to refuel his account.
It is now 2006, he has most of his debt paid, has been back to work for 6 years, and has settled with the IRS. He had a pretty good understanding of the stock markets when he started.
Why do I say this? You had better take the next 3 to 6 months educating yourself before investing a dollar. For every one person making mad money on stocks, there are a hundred making nothing or even losing most of it.
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