Ask a Query - How to Day Trade Stocks


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	How to Day Trade Stocks

Day traders spend time in front of computers purchasing and selling stock all day long, hoping its price will increase. They hold stock just or few minutes or few hours. The number of trades carried out in a day can range from 2-3 to hundreds. Day traders normally purchase stock on borrowed money, making day trading a high-risk job. Some day traders can be employed by bank or investment company while others are self-employed people.

Things Needed

* Stock pickers' association
* Trading theory
* Day trading software
* Trading account

Steps

1. Purchase day trading software. For day trading, you should buy 3 types of software. Data software gives price feeds. Charting software gives charts prices and provides technical analysis indicators. Trade execution software helps a trader to carry out trades.

2. Get an account with a direct-access broker. The law mandates your account should hold at least $25,000 at all times.

3. Research a company prior to purchasing its stock. Check its old charts to study its past performance and read its earnings report to check whether it is profitable.

4. Subscribe to a stock pickers' association. Stock pickers are investors who choose stocks or mutual funds according to assumed discrepancies between the current market prices and their imaginary real values.

5. Choose a trading theory, like Bollinger Bands. To simplify, Bollinger Bands are mean price levels over and below the current price. When the stock price traverses these levels, you can either purchase or sell the stock.

6. Be in touch with business developments. Daily factors can affect the price movement of the stock you want to trade. Company news, press releases and national news all provide good sources of information.

Tips & Warnings

- Scrutinize the day trading firm you want to do business with. Contact your state securities regulator and find out if the company is registered with the SEC. Find out if there are any complaints registered against it either by regulators or its clients. The telephone number for your state securities regulator is available in the government part of your local phone book.

- If you want to work for a day trading firm, remember it makes money irrespective of you do or not. It will give you all the required trading equipment, but also charges you a commission per trade carried out.

- While day trading, don’t risk money that you can’t afford to lose or meant for alternative purpose. Most day traders experience financial losses in the initial stages of trading.

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