Day trading, is at once a great way for individuals to make a great deal of money and a great way to lose a great deal of money. I have always believed that your reward is in proportion to your risk. If that is true than day trading could yield tremendous rewards. What are the steps that you need to take to ensure that you are on the winning side of the equation?
To understand day trading, you need to understand its nomenclature. Day trading is not named for the obvious, that you trade only during the day. Of course, all trading takes place during the day, while the market is open just like any other stock market trading. What makes day trading unique is that a day trader will sell all his or her positions by the end of the day. In other words, a day trader does not own any stocks when the market closes. The reason for this will become evident later.
In a nutshell, day traders seek to profit from tiny market fluctuations by purchasing huge amounts of penny stock then selling them for fractions of a cent higher than they bought. They make money because they purchased hundreds of thousands of shares, so if a stock rises by one penny, a day trader will earn $1000 for every hundred thousand shares that they own. Sounds easy doesn't it?
Day trading is an exacting practice that require skill, luck, dedication and a fair amount of capital. A day trader requires a trading account with a real-time trading platform. This allows you to make trades at the exact price that you want to rather than the price 15 minutes ago, as many trading platforms are 20 minutes delayed. Along with your real time platform, your internet service provider, will have to furnish you with a static I.P. address. This is much more expensive than the dynamic I.P. address that you have now.
All of this adds up to an undertaking that is not for everyone.