Day Trading Basics

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What Day Trading Is Not

So much mythology surrounds day trading: Day traders lose money. Day traders make money. Day traders are insane. Day traders are cold and rational. Day trading is easy. Day trading is a direct path to [more…]

The Difference between a Hot Day Trading Tip and Insider Trading

Day traders, who buy and sell so quickly, frequently receive hot tips. They may be participating in message boards or chat services where hot rumors can get the blood flowing on a dull day. If these hot [more…]

Rule Changes in Securities Markets in Crisis Conditions

As a day trader you will find that most trading days are governed by a predictable set of rules and regulations. Regulators sit on the sidelines, watching the markets with little interaction until a big [more…]

Risk-free Rate of Return and the Time Value of Money for Day Traders

Any investment or trading opportunity should include compensation for the time value of your money.In day trading, your returns from the time value of money are small, because you only hold positions for [more…]

Differences between Trading, Investing, and Gambling

Day trading is a cousin to both investing and gambling, but it is not the same as either. Day trading involves quick reactions to the markets, not a long-term consideration of all the factors that can [more…]

Manage the Risks of Day Trading

When you know more about the risks, returns, and related activities of day trading, you can think more about how you’re going to run your day-trading business. Before you flip through the book to find [more…]

Capital Requirements for Day Trading

You don’t necessarily need a lot of money to begin day trading, but you do need a lot of money to buy certain kinds of securities.

Stocks generally trade in [more…]

Day Trading in the Commodities Markets

Commodities can provide an opportunity for the shrewd day trader to make a tidy profit. While commodity prices usually tend to increase at the same rate as in the overall economy, meaning they maintain [more…]

Types of Derivatives for Day Traders

Day traders are likely to come across three types of derivatives: options, futures, and warrants. Options and futures trade on dedicated derivatives exchanges, whereas warrants trade on stock exchanges [more…]

Day Trading in Derivatives

Day trading in derivatives is a little different than trading in other types of securities because derivatives are based on promises. When someone buys an option on a stock, they aren’t trading the stock [more…]

Popular Things for Day Traders to Trade

You can day trade so many different securities and derivatives! Sure, you want to trade anything that makes money for you, but what on earth is that? Each market has its own nuances, so if you flit from [more…]

When Day Traders Don’t Close Positions at the End of the Day

By definition, day traders only hold their investment positions for a single day. Closing out at the end of the day is important for a few reasons: [more…]

Maxims and Clichés that Guide and Mislead Day Traders

Clichés are useful shorthand for important rules that can help you plan your day trading. But they can also mislead you. Here’s a run-through of some clichés that you’ll come across in your trading career [more…]

The Difference between Speculating and Hedging when Day Trading

Professional traders fall into two categories: speculators and hedgers. Day traders are speculators, but it is important to understand the difference.

Speculators [more…]

Day Traders Work in a Zero-sum Environment

Day trading is a zero-sum endeavor; it has exactly as many winners as losers. And options and futures markets, which are popular with day traders, are zero-sum markets. If the person who holds an option [more…]

How to Be Disciplined about Your Day Trading

Day traders must start each day fresh and finish each day with a clean slate. This daily regimen reduces some of the risk, and it forces discipline. You can’t keep your losers longer than a day, and you [more…]

Commit to Day Trading as a Business

Day traders need to commit to market trading as if it were a business. For many people, the attraction of day trading is that traders can very much control their own hours and day trading seems like a [more…]

How to Profit from Part-time Day Trading

Can you make money day trading part-time? You can, and some people do. Successful part-time day traders approach trading as a part-time job, not as a little game to play when they have nothing else going [more…]

Day Trading Makes a Bad Hobby

Because of the excitement of day trading and the supposed ease of doing it, you may think that day trading makes a great hobby. On a boring Saturday afternoon, you could just spend a few hours day trading [more…]

Personality Traits of Successful Day Traders

Successful traders are a special breed. They maintain strict discipline about how they approach their trading day and what they do during market hours. Not everyone can be a day trader, nor should everyone [more…]

Day Trading Success Rates

Given the participation of day traders in securities markets, researchers are always trying to figure out whether they make money. Here is a review of some of that research on day trading success rates [more…]

Set Limits on Your Day Trades

Setting a loss limit along with a profit goal is a good idea. For example, many futures traders have a rule to risk two ticks in pursuit of three ticks. That means that they’ll sell a position as soon [more…]

Day Trading Account Restrictions You Should Know

The Federal Reserve’s Regulation T is one of the key restrictions in the SEC arsenal of tools for controlling day trading. Rules related to the settlement of stock transactions and borrowing from others [more…]

Strategies for Successful Day Trading

Day traders often trade stocks in lots of 1,000 shares or more, putting large portions of cash at risk with every trade. Although the profit potential is great, so is the risk of losing all your money [more…]

How to Avoid the Most Common Day Trading Mistakes

If the risks and costs don’t scare you away from day trading, you need to become familiar with some common mistakes that lead to failure for many day traders. Here are some of the more serious mistakes [more…]

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