Day Trading

Day Trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions will usually (not necessarily always) be closed before the market close of the trading day. Traders that participate in day trading are called day traders

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.

I popular methods are to use the full stocastic, RSI, and MACD. These methods essentually tend to show when a stock is over bought and over sold. I can not go into all the details of how to use them here, but I will provide you with a link where you can learn about them.

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators_and_overlays:moving_average_convergence_divergence_macd

There is nothing called day trading anymore. since 2005 the concept was abolished when the SEC issued the law of locking the funds for 72 hours from the day of purchase. Meaning if you buy the stock today and you sell it tomorrow, you cannot recover your funds until two more days.

No. A bank will not, as you need something to legal tie the funds too…even with a signature loan, you need to explain the reason for the loan (this is to prevent money laundering). Your only option in this case is a Margin Account through your broker. But since you trade options, you would already have a margin account, which means you know you do need to maintain equity in the account.
There is an alternative. BUT, I wouldn't recommend it.
You could engage in a Carry Trade. Again!! I do not recommend you do this for Day-Trading options or stocks!
You short a currency (the JPY is pretty popular). Just like shorting a stock, you get a credit. Since Forex is not regulated by the same Margin Rules as Equities, you can get 50K for a simply $500 account. With that credit, rather than buying Bonds with a higher interest rate than the rate of the shorted currency (Fed rate is 4.25, so you could get a bond around that rate, which JPY rate is .5%..you profit from the difference) you put that money into your options account. You need to be careful that you leave some room in your Forex account, as you do not want a Margin Call on this. And you need to make sure you monitor the currency market to make sure that the JPY's flat…although if it is dropping, you have the added bonus of making money there too.

I am not suggesting you do this, but just saying that there are possibilities out there. Just don't use this one, as it you need to be aware of what you are doing.

YOu do your research.

Read books like popular science/popular mechanics, etc and look for trends that are plausible. Then look for some companies that specialize in these areas, and invest in the best ones.

Another good thing to do is read two of Peter Lynch's books "One Up On Wall Street" and "Beating The Street". He details in his book how he used common sense to turn Fidelity's Magellan fund into one of America's biggest and best. He bought little known companies which went on to become well known companies.

I've worked in the investment industry for many years, and I've had many people come up to me and say that they could make more money than I can. I took many people up on their offer, and less than 5% of these people have actually beaten me (and I'm no world beater – it just shows that people aren't as smart as they think they are)

There was a strategy popularized in a group called the turtles several years ago. One of their features was to watch for a price break out of a moving average number. They commonly used 50 or 200 day numbers, but your 100 day will work too.

If you notice price fluctuations over time, there seems to develop something some people call ceilings and floors. The price seems to stay within a channel. In statistics you would call that a standard deviation, as practically applied–technically, it is a bit more involved, yet it is a functional equivalent of the principle.

Now, if the price of the stock or commodity contract "breaks out" of that corridor, whatever caused that would likely have some strength or momentum to it. The turtles found that they got to get more action in watching the 50-day moving average breakouts, but there was more strength and better results in waiting for a 200-day breakout. Bear in mind, it didn't matter which direction the price broke because they would buy (go long) for increasing prices or sell-short (go short) for falling prices.

Next you apply a stop loss of some sort, usually a trailing stop of something like 5 or 10 percent depending on how volitile (how the price flops around). Just because something set a new higher or lower price than it experienced recently doesn't mean it will be a straight shot up or down.

The NYSE is a bit more ancient. I don't know if they still use this system or not, but they have specialists for a given stock. More popular traded stocks may have multiple specialists, and a specialist might take a bunch of thinly traded stocks. Usually, brokers are the ones placing orders to the specialist and the specialist will match up the buyers and the sellers and take a cut. They might have gone electronic by now. The specialist works for the stock exchange and pays a large fee for a seat on the exchange.

The NASDAQ is a fully automated computer system. The tons of brokers instead of talking to the specialist just input their orders. The array of buy and sell orders form the bid/ask. When there's a match, the trade executes by computer.

1. If an option is selling for .15, you have to multiply that by 100 because each contract represents 100 shares. So in this scenario, it would cost $15 to buy one contract.

2. 10 contracts = 1,000 shares. Multiply 1,000 by .15 and you get $150.

3. The volume will depend on many things, like if the option is in or near the money, how popular the underlying stock is, how close to expiration, how many contracts are outstanding, to name a few. In the scenario you mention above, you should be able to sell the option, but you have to keep in mind that there is a bid and an ask, and sometimes the bid doesn't move high enough to represent that whole gain.

4. That means that 619 calls were traded that day, it has nothing to do with the dollar amount (although if the all the volume was at the last trade price of .50 the total dollar volume would be $30,950).

Hope that helps!!

Some people do make money day trading, but every respectable study on day trading that I have seen has shown that far more people lose money day trading.

Here are some brief comments by the SEC on day trading:

http://www.sec.gov/investor/pubs/daytips.htm

They also have a much longer study on day trading at

http://www.sec.gov/news/studies/daytrading.htm

Pro's trade at both times. But if they were to pick one, most will trade the close. The reason is, by then they've determined market direction and can position before the next day or close out positions they don't want to carry overnight.

The second most popular time is amateur hour where many pros like to fade the gap and trade against the amateurs opening the market.

Hope that helps!