| the ominous warnings by the Securities and Exchange | | | | trader determine just how much money there is to |
| Commission cautioning investors against the | | | | be made on a certain stock. The NASDAQ II quote |
| controversial yet potentially lucrative business of day | | | | system offers data on all bids. Day traders who |
| trading, people attempt to try and attain day trading | | | | arrange to access the NASDAQ level II quote |
| skills, and a day trading stock tip is literally worth it's | | | | screens can assess the performance of a stock and |
| weight in either gold, or dross! Below is some | | | | determine its swing in price. |
| information on learning trading techniques, the risk | | | | While these trading techniques are totally legal and |
| you may incur, and techniques for becoming a | | | | totally ethical, they are highly risky. Day traders |
| successful trader. | | | | generally buy on borrowed money with the hope |
| Just what is day trading and how do individuals gain | | | | that they will realize higher profits through their |
| day trading skill? Day trading is the act of quickly | | | | acquisitions and sales. People who are called "pattern |
| buying and selling stock throughout the day in the | | | | day traders" by the NASDAQ and NYSE must have |
| hopes to profit from the marginal changes in the | | | | at least $25,000 in their accounts and can only trade |
| market for that specific day. Ideally, day trading | | | | in margin accounts. Margin accounts are brokerage |
| strategies allow investors to garner profits from the | | | | accounts in which the broker lends the investor cash |
| fractional increases in the market. | | | | to purchase securities. If the value of the stock |
| Day traders observe a particular set of indicators | | | | drops dramatically, the investor is required to deposit |
| when figuring out whether a stock is suitable for day | | | | more cash to cover the margin or sell the stock. The |
| trading. First, the stock must have high liquidity. This | | | | SEC warns against day trading and acting on a day |
| means that the stock in question has a large number | | | | trading stock tip, and has taken many steps to |
| of buyers and sellers. The liquidity allows day traders | | | | inform people of the corresponding risks. |
| to rapidly buy and then sell stock. Liquidity is created | | | | The first few months, a huge majority of day |
| by the volume of transactions on the market, the | | | | traders have massive financial losses and only a few |
| number of outstanding shares, the total number of | | | | make it through to become profit-making day |
| shareholders and the number of market makers. | | | | traders. For this reason, day traders should only |
| Many stocks on the NYSE and NASDAQ have a high | | | | invest cash that they can afford to lose. They should |
| degree of liquidity. | | | | never invest money reserved for necessities like |
| A day trader also looks at volume individually, in | | | | living expenses or education funds. |
| addition to using it as criteria for liquidity. To qualify | | | | Bear in mind that day traders do not own stocks for |
| for day trading, a stock should trade at least 500,000 | | | | longer than a few minutes at most. Stocks are never |
| shares a day. Stocks with 500,000 trades a day or | | | | kept overnight because of extreme hazards of prices |
| more enable the day trader to buy or sell a large | | | | changing to the detriment of the trader. Day traders |
| amount of stock without greatly affecting the price | | | | do not invest, rather, they hypothesize on the |
| of the stock. Volatility is another factor in evaluating | | | | movement in price of a stock throughout the day. |
| a stock for day trading. The phrase refers to the | | | | There are numerous websites whose sole purpose is |
| actual or expected price movement of the stock. | | | | to make money from those who seek a day trading |
| This movement is up or down over a period of time. | | | | stock tip. These websites promise quick results and |
| Day traders look at the pattern and volatility of | | | | sell hot tips to their members for a fee. The sources |
| stocks over an individual day. Stocks that change | | | | are generally paid to make these recommendations |
| price several times over one trading day are good | | | | and should be avoided. Seek the advice of a proven |
| candidates for day trading. A fluctuation of at least | | | | professional, and take plenty of time to discover |
| $2.00 per day is recommended. | | | | trading strategies for longer term success. |
| Finally, a day trader looks at the price transparency | | | | Remember, there is no quick money, and day trading |
| of stock. This term refers to the ability to collect | | | | skill is often paid for with debilitating stress and |
| information on the order flow of a stock. Also called | | | | cataclysmic losses. |
| market depth, price transparency helps the day | | | | |