Day Trading

I'm not familiar with CNBC's Million Dollar Portfolio Challenge, so I don't know what their investing time horizon is like for this task. Depending on how long that horizon is, I would probably make different sets of choices for your million dollars. Over a longer horizon, I would probably do some research and then pick 20 stocks, $50,000 each, and then let them sit there and do nothing for several months as that is, historically, the best way to get a return on investment. Too much "in and out" of the market would kill you on commission costs alone anyway.

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.

Check outthis link at TerraNova Online. The Investor platform is an escellent trading tool for a beginner, and is limited to one screen. I use RealTick and five screens, but it costs $250/mo. Ask about a free trial.

http://terranovaonline.com/

A lot of online brokerages claim to give you direct access, but if they take more than a second to execute your trade, it aint direct.

Find the articles online that have evaluated and compared online brokerages. I found a good one online in Barron's, but you'll find others in the trading magazines.

This is worth putting a little time and effort into, because it's a pain to switch, so once you choose, you're kinda stuck with it.

Townsend Electronics, the Parent company of TerraNova, is the one that digitized and electronified the Nasdaq. They are technological industry leaders and have a powerful and well built trading system.

What you should try is a free trial of their Investor platform, which I think is free anyway. Their rates are good also, but of course, it depends on how often you trade. It will take you months to learn all the bells and whistles of what this program can do.

The other top-of-the line program is TradeStation, but it costs big bucks to join and operate. Some people consider it the Cadillac of trading and technical analysis.

TerraNova is the home of the Day Trader, so they think nothing of you making several hundred trades a day. You don't have to do that, but it's okay here if you do.

Read vociferously:
"Which Is Better, Buy-and-Hold or Market Timing?"

"Do You Have What It Takes to Be a Market Timer

The Beginner's Bible in Technical Analysis is:
Edwards & McGee"Tech. Anal. Of Stock Trends"

Droke, ClifTechnical Analysis Simplified

Kahn, Michael N.Tech. Anal. Plain & Simple

Kamich, Bruce M.How Technical Analysis Works

Lefevre, EdwinReminiscences of a Stock Operator

Lofton, ToddGetting Started in Futures

Lowenstein, RogerBuffet (Warren)-The Making of a Capitalist

O'Neil, William J.How to Make Money in Stocks

Oz, TonyHow to Make Money From Wall Street

Rotella, Robert P.Elements of Successful Trading, The

Schwager, JackStock Market Wizards

Schwager, Jack D.New Market Wizards

Sperandeo, VictorTrader Vic-Methods of a Wall Street Master

Wasendorf, RussellAll About Futures

Slutsky, Scot and Darrell JobmanComplete Guide to Electronic Futures Trading

You can get every one of these books from your local library. If they don't have it, ask about Interloan Library System.

If you are new to trading, then you should definitely take a look at trading systems.

Here's why:

Every minute more than 150 Million Dollars change hands in the electronic index futures markets like the e-mini S&P and e-mini NQ. You can win or lose thousands of dollars in a few minutes; the futures markets can make you rich in a few weeks or months or wipe out your account with no mercy.

If you want to compete in the “game of games” and play against the best traders in the world, then you need to get ready. Too many gamblers are entering the arena without any plan or strategy, completely unprepared, and that's why they lose.

Trading a system will dramatically increase your chances to succeed in trading, because it eliminates five of the top six reasons why unprepared traders fail.

Here are the top six reasons why traders fail,
and how a trading system eliminates them

Let's take a look at the reasons why traders lose money:

1. Lack of a Trading Plan
2. Lack of Discipline to Follow the Plan
3. Failure to Control Emotions
4. Failure to Accept and Limit Losses
5. Lack of Commitment
6. Over-Trading

By all means you have to avoid these mistakes if you want to win.

Here's how a trading system eliminates 5 of the 6 top reasons why traders fail:

Solution #1: Having a trading plan

Having a trading system means having a pre-defined set of rules you have developed to guide your trading. Therefore you HAVE a trading plan, eliminating the No.1 cause for failure.

Solution #2: Following the trading plan

The easiest way to follow a trading plan is to automate it. Almost every trading system can be automated, and you could let the computer trade for you. You won't have to worry about your discipline any longer, as the computer mechanically trades every setup for you.

Solution #3: Controlling emotions

Trading with a system removes emotions from trading. If you don't have a strategy and you try to make decisions when the market is moving, you are liable to become emotionally attached to positions. You may experience panic and indecision when the market does not move in your favor, as you do not have a prepared response. That's when most traders lose their money. If you follow a system you will know what to do no matter what the market does.

Solution #4: Controlling your losses

You probably have heard the saying “Let your profits run”. Unfortunately most traders let their losses run. A trading system will get you out of a position when the predefined stop is hit. Unless you override the system to “give the trade a little bit more room” it will stop the loss and therefore limit your losses.

Solution #5: Commitment

You won't believe how many traders show a lack of commitment and therefore lose money. Lack of commitment means that they stop trading after the first loss, and don't give their system a chance to make back the money they lost. Trading is not a one-way street, and losses are part of our business. If you can't accept the fact that there will be losses, you shouldn't trade. Fortunately a trading system can help you to overcome this problem; an automated trading system continues trading according to the rules, and therefore adds much more consistency to your trading.

As you can see, five of the six top reasons why traders lose money in the markets are simply eliminated when you start trading with a system.

Without any guarantee, your chances of making money rise incredibly when starting with a profitable trading system.

Hope that helps.

Learn how to invest:

1. Do not chase past returns. People that buy stocks or funds because they have done well in the past are doing exactly that.

2. Do not market time. Market timing is buying based on your (or your newsletter, or your TV, or neighbor's) guess about what is going to happen in the future. Even if someone knows something, you've already missed the boat. The price already reflects what you just found out.

3. Use index funds. Over time, index funds outperform actively managed funds, mostly because they do not have those high expense ratios. Some actively managed funds do beat their index, but the ones that do usually do not do so consistently. So why gamble? Use index funds. If you want to use a few actively managed funds, make sure that the costs are very low. Vanguard has some good ones.

5. Diversify. Don't put all your eggs in one basket. Own a mix of bonds, domestic equities (large, small and mid cap funds), an international fund and perhaps a REIT (Real Estate Investment Trust) and emerging market fund. Four to six funds is all you need. Know your risk tolerance and set up an appropriate asset allocation. Rebalance as needed.

6. Consider taxes. Use the least tax efficient funds in your tax-deferred accounts and the most tax efficient funds in your taxable accounts.

http://www.saveyournestegg.com/scam.html

You say you are doing OK – are you comparing your returns to their proper benchmark?

I recommend Vanguard for several reasons. They are client-owned so they do not have conflicts of interest with clients. They stayed out of the scandals. Their costs are very low. They are set up so that active trading is not allowed (so you don't pay the costs for active traders). They have excellent funds. Their philosophy is 'buy and hold'. They have a wide selection of mutual funds and ETFs. Their index funds are very well-managed (often the expense ratio is partially offset). They have excellent customer service.

That being said, if your looking to investing something that is the "least risky" and "most predictable" you should look at a low cost fund that tracks a broad market index . Check out VFINX, Vanguards mutual fund that tracks the S&P 500. If you looking for pure predictability, try a bond fund.

The others you mention Forex, Options and Commodities, are the MOST risky and LEAST predictable. And while they can be quite profitable for a professional trader, they are not suitable for the average/rookie investor.