| Day trading is the practice of buying and selling | | | | the expectation that the trend will continue. |
| stocks during the same day. Ideally at the end of the | | | | Fundamental analysis is one of the biggest tools of |
| day there has been no net change in your position. | | | | the day trader. The basic strategy is to buy a share |
| This means that for everything bought an equivalent | | | | which has just announced good news, or short-sell a |
| amount is sold. | | | | share on bad news. |
| A gain or loss is made on the difference between | | | | Technical day trading uses mathematical formulae to |
| the purchase and sales price. | | | | decide when a share is going to rise or fall based on |
| An effect of this style of day trading is that the | | | | previous price action. Many day traders use technical |
| shares are never delivered or received. | | | | indicators. |
| Day trading is more risky than any other trading | | | | You should avoid the following dangers of day |
| activity. It is very common to use margin with day | | | | trading: |
| trading (i.e. using borrowed funds), amplifying gains | | | | * Many day traders trade without a plan of any kind |
| and also amplifying losses. The downside is that | | | | as to what to buy and sell and when |
| substantial losses can occur very quickly. | | | | * In many cases a day is simply not long enough to |
| A common belief is that 80%-90% of day traders | | | | realise the profit of a share |
| lose money. | | | | * Day trading can be very emotional and gut-instinct |
| Day trading was once the domain of financial firms | | | | based |
| and professionals along with experienced traders and | | | | * Much of the fundamental analysis data day traders |
| speculators. It is now very common amongst | | | | use is quite delayed and this will mean that by the |
| everyday traders thanks to the internet. | | | | time it is received and acted on, the rest of the |
| Day trading is officially called "pattern day trading" | | | | market, especially the stock broking industry, has |
| and means placing four or more buy and sell orders in | | | | already taken action |
| one day on a regular basis. | | | | * Day trading can mean profits are too low to cover |
| Day traders trade various financial instruments | | | | fixed costs, such as brokerage |
| including: shares, options, warrants, foreign | | | | * Day traders often use leverage which can amplify |
| exchange(forex) and a host of futures contracts. | | | | losses as much as it can amplify gains. For the |
| Day trading evolved with the advent of electronic | | | | inexperienced it is a huge risk losing more than you |
| ordering and discount brokers. The home computer | | | | have in your float. |
| and the internet have made the environment friendly | | | | In closing, keep in mind that all stock market activity |
| to small day traders. | | | | is risky - there are NO guarantees. Having said that, |
| There are a number of strategies by which day | | | | we have found much better results for our students |
| traders attempt to make a profit. | | | | by teaching them how to develop a customised |
| Trend following, a day trading strategy used in all | | | | trading system which takes all the emotion and |
| trading time frames, assumes that prices that have | | | | gut-instinct out of playing the stock market. The |
| been rising steadily will continue to rise, and the same | | | | results speak for themselves! That's why we don't |
| for falling prices. The trend follower buys a share | | | | teach day trading at HomeTrader - in our opinion, it's |
| which has been rising or short-sells a falling share, in | | | | much higher risk for our clients. |