| Stock market day trading is a strategy that tries to | | | | makes it equally easy for the less-sophisticated |
| take advantage of the price swings that occur during | | | | investor to rack up heavy losses quickly if they don't |
| a single day. Sometimes referred to as "intra-day" | | | | know what they are doing. |
| trading, the basic idea is that most stocks will | | | | The main attraction of day trading is quick profits. |
| fluctuate during the trading day, even if they start | | | | However the same thing that makes it so attractive |
| and end near the same price. By buying into the | | | | also makes it potentially very risky. One option is the |
| particular issue when it's in a "lull" and then dumping it | | | | use of various software programs that will do |
| as it swings back up, the day trader is able to make | | | | automated analysis of various factors and indicators, |
| a small profit. Stock market day trading is best used | | | | and create recommendations based on very complex |
| and most effective as a strategy for investors that | | | | formulas. |
| have both a large amount of cash, and the maximum | | | | Most of these programs engage in what's called |
| leverage in buying stocks. | | | | "technical analysis" - the idea that price fluctuations |
| Day trading isn't limited just to stocks. In fact, the | | | | tend to occur in patterns. These patterns can often |
| largest trading market on the planet is the Forex, or | | | | be recognized, allowing the savvy investor to "buy |
| Foreign Currency Exchange market. Similar to stock | | | | low and sell high" without necessarily knowing |
| day trading, Forex investors look to take advantage | | | | anything about the particular stock, bond, or futures, |
| of small swings in the values of foreign currency | | | | while still profiting from these swings. |
| pairs. Forex is a trillion-dollar global marketplace. | | | | Day trading can be very seductive, particularly |
| Stock market day traders generally have more direct | | | | because it can be both lucrative, and fast. With a |
| access than a typical investor. Called "level 2″, | | | | large enough account on margin, it's possible to make |
| these investors have direct online access to various | | | | huge profits from very slight movements. |
| stock, bond, currency, and commodity exchanges. | | | | Unfortunately, this price pendulum usually swings both |
| This allows for very rapid execution of trades, | | | | ways, and it is just as easy to lose money as it is to |
| something very necessary if you want to take | | | | make money. |
| advantage of these intra-day swings. | | | | While stock market day trading counts it's wins and |
| Level 2 trading used to be reserved to the big | | | | losses in the space of a single day, it's really a |
| brokers and investment houses. Today however, | | | | longer-term investing strategy. Most successful day |
| nearly any investor can sign up with a a discount | | | | traders lose money on many days; the difference is |
| broker such as e-Trade, Charles Schwab, or dozens | | | | that they have more winners than losers over the |
| of other companies, and have level 2 access right | | | | long haul. The best piece of advice is never invest |
| from their home computer. While this allows anyone | | | | anything you can not afford to lose! |
| to engage in speculative stock day trading, it also | | | | |