Regarding taxes, in the US, if you make $60000 daytrading, you will pay short term capital gains. On the other hand, if you lose a net of $60000, you can only write off $3000 per year, until the $60000 is written off (about 20 years).
swh
An important aspect of day trading is to have a set investing plan. Day traders don't always make a profit on each trade they do during the day but if they keep to their plan (if it’s a good plan) they will be more likely make a profit for the day.
The barriers to becoming a day trader are experience and cash. You need both to succeed in the stock market.
They impact the market in a few ways. First they add volume to the market. They also can increase the speed of spikes. When a day trader sees his stocks tanking he will sell them. This will drive down the price more. Conversely if he sees a stock that is starting to rock he will buy. This will increase the value of that stock.
It all depends on the security traded. If you are trading LEH for instance (usually .01 spread), market orders are sufficient for quick entry/exits. But for something like POT (which has spreads of up to .40 at times), limits are a much better method to reduce slippage.
Most day traders that I know always limit however. But they "limit through". Limiting through means they are limiting through the market, which will usually give them the same result as a market order, but helps in one particular area: "the bad print". Sometimes if you go market, you may receive a bit out of the spread, especially if you route through ECNs (and even NYSE at times). But if you limit through, you might catch an ECN for a good fill (sometimes better than the best bid/offer). By limiting through, you also limit the price at which you want (so don't overpay and such).
Also, if you don't know what limiting through is…..if the market is say 29.10 x 29.12 …and you want to buy….you limit buy at something like 29.15. This way, the worst fill you could receive is 29.15. I've seen some terrible prints before, so I definitely suggest doing this.
Thin issues are most prone for the bad print, but even thick issues are a problem at times. With LEH yesterday, I see a print of 13.98 when the market was 13.84 x 13.85 (because of a bad market print). With POT a few days ago, I say a print of 219.55 when the market was 218.95 x 219.10.
read the below tutorials they will help you !
Not all traders are day traders, and most are not, but they are not opposed to taking a profit when a position hits an early exit point.
Day traders get much press, good or bad, because many amateurs are amorous of the title and the action, but realistically they are not in the majority.
Many traders also are investors, and do buy for the long term. But long term to a trader is 9 months to a year. They'll use their equity positions to write cover calls especially playing the dividend. The equity is long term and the option is held only for a week or so.
Trading can afford one a very nice living and an above average life style.
What exactly do you think the "other" day traders do wrong?
If they are "ignorant" as you suggest – what should they know that would make them less unsuccessful?
If this is more than idle boasting – you should take your results in the real world to a publisher and get a book out that allows the ignorant masses to understand your superior techniques and live off the royalties!
I found the answers I was looking for at this site – http://www.traderstatus.com/whyanentity.htm
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.
Most highly trained professionals refuse to day trade. Many amateurs think they are smarter than the pro's and try their hand at day trading. Fools rush in where wise men fear to tread…
Read these links:
http://www.sec.gov/investor/pubs/daytips.htm
http://www.ftc.gov/opa/2000/05/daytrading.shtm
http://www.ftc.gov/bcp/conline/pubs/invest/daytrade.shtm
http://www.fool.com/investing/small-cap/2004/12/27/daytrading-dangers.aspx
Also read Tom Busby's book, Winning the Day Trading Game.
They'll give you a good primer. Fantastic books to get you started. After that, you'll have a much better sense on what and where to go next.
One option would be to work with a mentor. Todd Mitchell looks interesting at tmitchell.com or tradingconcepts.com for trading.
Though if you go to daytrading, you'll need to practice a lot more than a couple of weeks. Most successful day traders I know practiced at least months before being somewhat successful as there's all sorts of nuances, the shorter the timeframe that you trade in.
Let me know if you have any questions.
Hope that helps!