What is day-trading and how does it work?
November 14th, 2009
I am only 16 and don’t have a dime to my name. For economics class I am currently taking, I must do research on the stock market and the different strategies used by investors. One strategy I don’t really understand is day trading. What is it and how does it work? How much money is needed or recommended? Do you make lots of little day trading? What are good day trading stocks? What do investors look for when choosing day trading stocks? Is day trading safe or dangerous? Lastly, once the stocks start to reach highs again in the future, how do investors day trade? Ten points goes to the answer that answers ALL the questions. I really need your help to do well on this 100 points assignment. All help is appreciated and thanks to all in advance for answering.
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Posted in Stock Market Basics | 
Tags: day trading, day trading stocks, Economics, how much money, investors, money, Stock Market, trading stocks
alright for someone to actually answer your question finally….
daytrading is trading stocks on an intraday basis. basically you do not want to hold any over night positions due to market volatilitly or riskiness overnight. Supposedly over long periods of time daytrading has been proven not to be a successful strategy. I respectfully disagree but I havent exactly been doing it long term or "by the strict definition" daytrading. Basically you buy a stock XYZ in the morning at 1.00 and lets say you buy 1000 shares. That stock goes up to 1.01. well you made 1000 pennies or 10.00 dollars so you sell. It is a strategy that goes for small gains every day. Not a homerun but a single everytime you step to the plate. It is a RISKY strategy. Most the time it is done with margin money (borrowed) in order to leverage the market. instead of buying the 1000 shares with 1000 dollars you have you borrow to buy more shares if you only had say 100 dollars this can increase your profits but also your losses. a good daytrading stock would be one that will go up slowly but surely over a long period and the cheaper the better. stocks that average about the same price are good because the can vary a lot during the day making daytrading possible but these can often be expensive. Daytrading is really only possible when you can buy large amounts of the stock and the more expensive the stock the harder that is. You also want a stock that trades a lot of volume per day. stocks that only trade under 100000 shares a day do not work well. If you get a Citigroup or Bank of America they can trade hundreds of millions a day. The minimum amount required by FINRA in brokerage accounts once you are labeled a patter daytrader (on who executes 3 or more intra day trades in a 5 day period) is 25000 dollars. It is possible to daytrade with less but the less you have the harder cause you need to buy large amounts of stock. As stock reach highs it becomes harder to daytrade unless you have a lot of money. You have to get out before they fall too.
any questions just post additional details and ill try and help but hope this helps. Invest young and now and it will pay off in the future.