Day Trading Management

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Lower Risk through Diversification while Day Trading

Returns from day trading are a function of risk. If you want a guaranteed return, go down to your bank and open a federally insured deposit account. The returns will be almost comically low, but you'll [more…]

Understand the IRS Wash-Sale Rule when Day Trading

Day trading income is comprised of capital gains and losses. A capital gain is the profit you make when you buy low and sell high — the aim of day trading. The opposite of a capital gain is a [more…]

How to Determine the Probability of Ruin from Day Trading

Expected return is how much money you can expect to make if you stay in the day trading game. But it has a counterpart that is at least as important: the [more…]

Understand Volatility in the Derivatives Markets while Day Trading

Day traders seek more volatile securities because they offer more opportunities to make money during any given day. For this reason, they need to have ways to minimize the damage that may occur while being [more…]

How to Backtest Your Day Trading Strategy

In backtesting, a day trader specifies the strategy that he or she would use and then runs that strategy through a database of historic securities prices to see whether it would have made money. The test [more…]

Simulate Your Day Trading Strategy before Taking It to Market

With a backtested strategy in hand, you may be tempted to start putting real money on the line. Don’t, at least not yet. Start with what is known variously as [more…]

Backtesting and Simulation Software for Day Traders

Several vendors have risen to meet the challenge of backtesting and simulation so day traders can try out their strategies before they lay down real money. This list is by no means exhaustive, nor is it [more…]

How to Keep Track of Your Day Trading Gains and Losses

After you put your day trading strategy to work during the trading day, it’s easy to let the energy and emotion overtake you. You get sloppy and stop keeping track of what’s happening. And that’s not good [more…]

How to Calculate Compound Average Rate of Return (CAGR) from Day Trading

The most common way to calculate investment returns is to use a time-weighted average. This method is perfect for traders who start with one pool of money and don’t add to it or take money out. This is [more…]

How to Calculate the Risk in Your Day Trading Returns

Most day traders are pretty good at keeping track of the money they have made, but generally not so good at assessing the risk inherent in those returns. Here are a couple of measures you can look at to [more…]

How to Benchmark Your Day Trading Performance

To understand your performance numbers, you need one more step: what your performance is relative to what else you could be doing with your money. [more…]

Add Partners to Your Day Trading Business

Once your day trading proves to be wildly successful, you may want to take on partners to give you more trading capital and a slightly more regular income from the management fees. You can take on partners [more…]

Day Trading Exchange Traded Funds (ETFs)

Exchange traded funds (or ETFs) are a cross between mutual funds and stocks, and they offer a great way for day traders to get exposure to market segments that may otherwise be difficult to trade. A money [more…]

Day Trading in the Currency Markets

Currency trading can be really exciting for a day trader. Every day, trillions (yes, that’s trillions with a t) of dollars of currency are exchanged between governments, banks, travelers, businesses, and [more…]

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