Day Trading

Let's devote a little time to a term known as "day-trading". A day-trader is
a person who's goal is to make his or her profits from the purchase and
sale of a stock in the shortest amount of time (preferably a single day).
These are usually, but not always, trades made on "momentum" stocks.

Day-traders go for quick in-and-out gains, and lots of them! A day-trader
might use technical analysis software and real-time financial news stories,
from the online service providers or TV networks, to find a stock to buy.
They dive in and buy a lot of shares hoping for a quick price increase.

They're willing to take a small 1/8th or 1/4 point upward price move on a
stock in just a matter of hours (hopefully minutes) for a small but quick
profit. Of course that small profit, might not be that small. The size of the
profit depends on the total number of shares purchased.

It usually takes some really good late breaking news to make a stock start
to take-off on a fast upward move. This can be in the form of a great 10Q
report, or a great report on a new product, or even a recommendation in
a newsletter. Day-traders look for news that causes quick movement.

Your technical analysis software can identify price and volume changes
in the trading pattern of a stock. Sometimes these unusual changes will
cause your software to issue a buy or a sell signal. Your software can
recognize a trend developing and alert you to make a decision.

The key word to describe day-trading is be "nimble". Most investors buy
stocks with the expectation of holding on for a reasonable length of time for a hefty increase in share price. Not day-traders! These folks think that a hour is long time to wait, and all they want is a small move.

Day trading schools have popped-up all over the country. Many people
learn to day trade with the expectation of making it a career. It's not at all
unusual for someone to pay $4000.00 to $5000.00 tuition to go to a two to four week school that teaches day trading.

Day traders can make large amounts of money by making a lot of trades.
They give up the big moves that take longer in exchange for smaller sized
profits on a higher number of trades. This only became possible within
the past few years due the lower trading cost at discount brokerages.