Day Trading

Also, some good books to start with are;
Trading In the Zone, Mark Douglas
Mastering The Trade, John Carter
High Probability Trading, Link
Trade Your Way To Financial Freedom, Tharp

Learn the basics of "Technical Analysis" before you read these books. Understand Candlestick Charting, Moving Averages, Support & Resistance, RSI, Channels etc.

There are many great books out there…. Don't read any of them until you've gone through these. Don't ever underestimate the importance of money management, position sizing & trading psychology.

This will take at least a year to get through. Do it and you'll save yourself from many costly mistakes.

It is true that 80% of all day traders eventually lose all their money. Then again, about 60% of the remaining 20% make enough to live off of or at least provide a second income. The remaining 40% steadily lose money.

The keys to success in day trading (% of importance):

1) money management - knowing how much to bet on each stock, when to take profits, and when to cut losses (40%)

2) emotional control - patience, not acting out of greed or fear, never averaging down, only buying high probability set-ups, etc. (35%)

3) a good system - knowing when to enter and when to exit (25%)

You'll notice that the system is the least important factor for success. Almost any system is profitable (although some much more than others), but the real important part is whether you can actually use it correctly or not. It might not match your personality, for example. Also, if you don't manage your money correctly, you can go bankrupt on even the best system in the world.

Unless you have amazing emotional control, have a natural inborn talent for trading (I've never met anyone like this, though), or have a brilliantly flexible mind that adapts quickly, you will most likely steadily lose money day trading for at least the first few months.

The worst part about getting started in day trading is that there's very little way to tell if you'd be successful before you actually start buying stocks and losing (or making) money. Paper trading is not even close to the same as real trading, because there's no emotion involved, or commissions or slippage.

On the other hand, once you have reached the right point, the rewards can be substantial. It took me 15 months of swing trading and staring at computer screens all day long and three months of day trading (losing 50% of my entire equity in the process) before I turned the corner. Now, I can quite conservatively double my money each year (but notice it took me a year to recover from the first year and a half). That's probably a typical story. If you read about Stock Market Wizards by Jack D. Schwager, you'll notice that almost every master trader went bankrupt at one point or another.

Most people quit before they reach this point, and I'd be the first to agree that day trading is not for everyone, or even for most people.

Also, remember this: any person with a truly successful and profitable day trading system would never sell or share it. You can make much more money using a winning system than selling it. Okay, maybe 10% of the systems out there are legitimate, but you'll never know which 10% until you've bought it and lost lots of money on it.

Be careful when looking for winning systems, and always look for a money-back guarantee.

The key to success is not the system the person uses so much as it is the person using the system.

One last word of advice: Unless you're willing to sacrifice thousands of hours in front of the computer and thousands of dollars, and able to stand the emotional and financial pain you will endure, then don't even start.

A day trader buys and sell the same security on the same day. Day traders like to be flat when the market closes and not carry over positions.

A pattern trader is one that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer’s total trading activity for that same five-day period.

It is not Ameritrade that decides who is or who isn’t a pattern trader, it is the SEC. So you can relax, you’re not a pattern trader, so don’t worry about it until you’re start going in and out on the same day in the same security

Now you can go out and enjoy yourself - happy trading, go get em

Buy and Sell orders are usually executed within a few seconds for all trading platforms. But the order entry may be easier and faster on some platforms than on others.

Not all day-traders trade the same way. If you trade only once or twice a day. Then any platform might be suitable for you. But if you trade many times a day. Then you might need a platform where it's easy to enter Buy and Sell orders.

From what I can tell, there are thousands of advisory services. Some I know of have several products (like schaeffer.com). Others just have one.

In any event, the number of subscribers needed is dependent upon your fixed and variable costs, not of someone elses. My startup costs are fairly fixed, so then, it's mainly x subscribers at $y to break even, and then after that, it's profit until such point I need another person to manage the flow of information, etc.

The key in differentiating yourself is your performance and your advertising. Both will get you more clients, however, your performance will help keep them.

Hope that helps!

Depending on what you invested in, you could have to register with the SEC. Additionally, you would be signing up for double taxation! You would have to pay additional legal and accounting fees, and could have your quarterlies audited by the IRS.

There are absolutely no advantages to this scheme. Never mind that if you tried to become a trader for a living, you would become homeless, as more than 90% of "day traders" lose more than 2/3 of their capital in the first year.

Not to mention that this would look a hell of a lot like money laundering to an outsider (someone who creates a shell holding corporation to avoid having his name attached to the movement of significant amounts of cash moving across state lines is a pretty good way to meet some kind agents from the FBI).

It's never a good idea to try to outsmart the federal government - sure, they might not be the smartest bunch in the room, but they sure know how to hold a grudge.

investing isn't like pitching quarters…. you actually need to learn things and it's a lifelong endeavor….

There is a difference between 'traders' and 'investors'. In the long run traders are statistically losers. That's why there are so few Warren Buffets in the world.

success in anything of value takes effort, knowledge and experience. There is not some little trick that is going to make you rich.

If you're interested, here are some things you can learn to be an investor. It's not as exciting, but it is more successful…. you can always use 10-15% of your portfolio to gamble with, but learn to be an investor with the bulk of it.

Start by getting a subscription to Barrons or Investors Business Daily… Do this for 6 months or a year. At first, It seems a bit mysterious, but pretty soon you start to understand the terms and things that investors are looking for and what they are afraid of

Go out to the internet and search on the following subjects. Become very familiar with the concepts.
Asset allocation
Long term investing
inflation
Roth ira vs ira
Large med small cap
Value vs growth
Indexed mutual funds
No load mutual funds
ETF
Sector funds
Bonds CD preferred stock
dividends
International funds
Market cycles
volatility
Fundamental analysis
Technical analysis

In most cases, I think it is wise to use indexed mutual funds and ETF's to build the base of your portfolio.

Good luck

Some of the more commonly day-traded financial instruments are stocks, stock options, currencies, and a host of futures contracts such as equity index futures, interest rate futures, and commodity futures.

Day trading used to be the preserve of financial firms and professional investors and speculators. Many day traders are bank or investment firms employees working as specialists in equity investment and fund management. However, day trading has become increasingly popular among casual traders due to advances in technology, changes in legislation, and the popularity of the Internet.

Trade Frequency

Although collectively called day trading, there are many sub-trading styles within day trading. A day trader is not necessarily very active. Depending on one's trading strategy, the number of trades made in a day may vary from a few to hundreds.

Some day traders focus on very short or short-term trading, in which a trade may last seconds to a few minutes. They buy and sell many times in a day, trading very high volumes daily and therefore receiving big discounts from the brokerage.

Some day traders focus only on momentum or trends. They are more patient and wait for a ride on the strong move which may occur on that day. They make far fewer trades than the aforementioned traders.

Overnight Position

Traditionally it is suggested day traders should always settle their positions before the market close of the trading day to avoid the risk of price gaps (differences between the previous day's close and the next day's open price) at the open. Some day traders consider this to be a golden rule to be obeyed at all times. Some day traders, however, believe they should let the profits run, so it is acceptable to stay with a position after the market closes.

Day traders often borrow money to trade. Since margin interests are typically only charged on overnight balances, the extra costs discourage them from holding positions overnight.

Profit and Risks

Because of the nature of financial leverage and the rapid returns that are possible, day trading can be extremely profitable, and high-risk profile traders can generate huge percentage returns. Some day traders manage to earn millions per year solely by day trading.

Because of the high profits (and losses) that day trading makes possible, these traders are sometimes portrayed as "bandits" or "gamblers" by other investors. Some individuals, however, make a consistent living day trading.

Nevertheless day trading can become very risky, especially if one has poor discipline, risk or money management. The common use of buying on margin (using borrowed funds) amplifies gains and losses, such that substantial losses or gains can occur in a very short period of time. In addition, brokers usually allow bigger margins for daytraders. Where overnight margins required to hold a stock position are normally 50% of the stock's value, many brokers allow pattern day trader accounts to use levels as low as 25% for intraday purchases. This means a day trader with the legal minimum $25,000 in his account can buy $100,000 worth of stock during the day, as long as half of those positions are exited before the market close. Because of the high risk of margin use, and of other day trading practices, a day trader will often have to exit a losing position very quickly, in order to prevent a greater, unacceptable loss, or even a disastrous loss, much larger than his original investment, or even larger than his total assets.

Even when a position has made a profit, the trader has to offset the transaction costs and the interest on the margin. It is commonly stated that 80-90% of day traders lose money. An analysis of the Taiwanese stock market suggests that "less than 20% of day traders earn profits net of transaction costs".

Day trading is considered a risky trading style, and regulations require brokerage firms to ask whether the clients understand the risks of day trading and whether they have prior trading experience before entering the market.

Also, the surest way to pile up losses is to expect your trading to pay the bills.