investments & Training
Day Trading Benefits – What are they? By J. Foley
Although previously considered to be the exclusive domain of floor traders only, day trading is now an option for anyone speculating on the market. With the advent of improved communication technology, affordable computers, the lure of large intra-day price swings and competitive commissions, day trading is gaining in popularity by leaps and bounds.
Day trading has often been vilified. There have been many pros who have openly condemned day trading. Even responsible institutions have at times raised serious doubts against day trading. But fact is, with real-time quotes available, improved computer technology, and next to nothing commission rates, day trading at his point of time makes ample sense.
There are definite benefits when it comes to day trading.
You don't have to be concerned about overnight news
This is a big plus with day trading. Since you are completing your trading within the span of a single day, it doesn't matter if something big happens overnight which you cant deal with the next morning when the markets already start in a bearish note. With day trade you know what you have made at the end of the day, whether you win or lose.
You don't run the risk of riding losses
Since you finish off with your trading within a day you may lose but you avoid losing more the next day as you don't hold on to your stocks. So if any stock of yours suffers significant losses over a few days you are not affected to a great extent.
You can capture large price swings
If you are into day trading it means you are always on the ball. So nothing that happens in the market escapes you. If any news or event results in large price swing of any particular stock you are there to capture it. A constant monitoring of the market is needed for this. You have to have the patience to wait for the event to happen. When the event nears you have to anticipate it through your analysis and instinct. And when it actually happens you have to grab the opportunity as quickly as possible.
You get instant feedback
With day trading you don't have to worry long as to what will happen to your money. You are buying and selling the same shares in a single day. So by the end of the day you know how much you have made that day. You may have made a profit or you may have lost. But whatever has happened the results are right there in front of you in the evening.
But, if you are thinking about being a serious day trader you should also be aware of the risks you are about to take.
You encounter significant intra-day volatility
At times stock prices suffer significant swings within a single day, but the swings generally get corrected over a period of time. Being a day trader you cant wait for the correction to take place and you may end up losing big time.
You need a sizeable investment
If you are seriously contemplating day trading you would be required to make a significant investment. You need to get yourself the best hardware around, the pretty expensive software platforms which are must-haves, you need to pay a sizeable amount to gain access to all the live quotes and news. So before you take the plunge, do some soul-searching and decide whether you are really that passionate about getting into this.
investments & trading by J. Foley
Saturday, April 08, 2006
Friday, April 07, 2006
Basics Of Stock Trading
Investments & Trading
Basics of Stock Trading By J. Foley
To "trade" is to buy and sell, according to the terminology of the financial markets. Stock trading involves buying and selling of millions of shares all over the world. It is a mystery how this large a volume and value of trade is accommodated in the system of trading. These financial markets are marvels of technological capacity.
If you're looking to invest in stocks, it is necessary that you have at least a basic understanding of how the market works. You don't have to know all of the technicalities of buying and selling stocks. Explaining the technical aspects of the markets is possible by tracing the appropriate links available in the web. The first and foremost necessity is to know how the exchange floor works, no matter whether you trade through the floor or electronically.
On the exchange floor, when the market opens, hundreds of people are seen rushing about shouting and signaling to one another, watching monitors, and entering data into terminals, talking on cell-phones. It looks like a complete fiasco.
However as the day draws to its end, the markets have successfully worked out all trade and are prepared for the next day. Here is a step-by-step presentation of the execution of a simple trade on the exchange floor of any major stock exchange.
You ask your broker to buy certain number of shares of a company at market.
The broker's order department passes the order on to their floor clerk on the exchange.
The floor clerk transfers it to one of the firm's floor traders who finds another floor trader wanting to sell this many shares of the company you wanted. The floor trader knows which floor traders transact in particular stocks.
The two converge on a price and complete the deal. The notification process travels backward along the line and your broker gets back to you with the final price. A few days later, you will receive the confirmation notice in the mail.
In electronic markets vast computer networks often reduce the work of human brokers in matching buyers and sellers. It lacks the charged up scenes of the bustling floors of busy stock exchanges, but it is efficient and fast. Quite a few institutional traders, mutual funds, pension funds, and the likes, prefer this method of trading.
As an individual investor, you can get almost instant confirmations on your trades at very low costs. It also helps you keep a tab on online investing by taking you closer to the market by one step.
Yet, a broker is still needed to handle your trades – individuals don't have access to the electronic markets. Your broker accesses the exchange network and the system finds a buyer or seller depending on your order.
You then will need to infer the price behavior of stocks. Price is the immediate cost of a share. And this behavior is so uncertain that it keeps everybody in the game quite excited. This is what generates the profits or losses that are made by investing in this market.
Don't worry if you find it very difficult to infer the price, because it really is difficult. They frequently fluctuate all along the day. And there is no guarantee that in the morning a price will start at the point where it was at the end of the previous day, though it usually starts in the neighborhood.
Yet there are patterns to be figured out, and expectations often work. Depend on your intelligence and on a professional broker, and never stop short of understanding fully what caused a bad result when it occurs. Learn the practical lessons from your experience, record them in writing, and consult them whenever necessary.
investments & trading by J. Foley
Basics of Stock Trading By J. Foley
To "trade" is to buy and sell, according to the terminology of the financial markets. Stock trading involves buying and selling of millions of shares all over the world. It is a mystery how this large a volume and value of trade is accommodated in the system of trading. These financial markets are marvels of technological capacity.
If you're looking to invest in stocks, it is necessary that you have at least a basic understanding of how the market works. You don't have to know all of the technicalities of buying and selling stocks. Explaining the technical aspects of the markets is possible by tracing the appropriate links available in the web. The first and foremost necessity is to know how the exchange floor works, no matter whether you trade through the floor or electronically.
On the exchange floor, when the market opens, hundreds of people are seen rushing about shouting and signaling to one another, watching monitors, and entering data into terminals, talking on cell-phones. It looks like a complete fiasco.
However as the day draws to its end, the markets have successfully worked out all trade and are prepared for the next day. Here is a step-by-step presentation of the execution of a simple trade on the exchange floor of any major stock exchange.
You ask your broker to buy certain number of shares of a company at market.
The broker's order department passes the order on to their floor clerk on the exchange.
The floor clerk transfers it to one of the firm's floor traders who finds another floor trader wanting to sell this many shares of the company you wanted. The floor trader knows which floor traders transact in particular stocks.
The two converge on a price and complete the deal. The notification process travels backward along the line and your broker gets back to you with the final price. A few days later, you will receive the confirmation notice in the mail.
In electronic markets vast computer networks often reduce the work of human brokers in matching buyers and sellers. It lacks the charged up scenes of the bustling floors of busy stock exchanges, but it is efficient and fast. Quite a few institutional traders, mutual funds, pension funds, and the likes, prefer this method of trading.
As an individual investor, you can get almost instant confirmations on your trades at very low costs. It also helps you keep a tab on online investing by taking you closer to the market by one step.
Yet, a broker is still needed to handle your trades – individuals don't have access to the electronic markets. Your broker accesses the exchange network and the system finds a buyer or seller depending on your order.
You then will need to infer the price behavior of stocks. Price is the immediate cost of a share. And this behavior is so uncertain that it keeps everybody in the game quite excited. This is what generates the profits or losses that are made by investing in this market.
Don't worry if you find it very difficult to infer the price, because it really is difficult. They frequently fluctuate all along the day. And there is no guarantee that in the morning a price will start at the point where it was at the end of the previous day, though it usually starts in the neighborhood.
Yet there are patterns to be figured out, and expectations often work. Depend on your intelligence and on a professional broker, and never stop short of understanding fully what caused a bad result when it occurs. Learn the practical lessons from your experience, record them in writing, and consult them whenever necessary.
investments & trading by J. Foley
Investments & Trading
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