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Day Trading Stocks

Day Trading Stocks
Written by David

Stock market investing has experienced a radical change in the last decade from the perspective that there has been a fundamental shift away from long term strategies of buy and hold to the more short term instant gratification crowd. In fact, most retail investors today are now actually day traders. People nowadays rarely buy into a company and hold it until retirement.

Day trading stocks has become an increasingly popular way to beat the financial crisis and for work-from-home and self-employed individuals to make a substantial second income. The concept is fairly simple; you learn how to trade, practice incredibly hard, devise a profitable strategy and become a successful trader. The reality, however, is somewhat harder although not impossible if you are both disciplined and enthusiastic that this is how you want to earn a living.

Although day trading stocks is associated with a glamorous lifestyle where a few clicks of a mouse will make you wealthy, smoke expensive cigars and drive a fast car, the reality is that it is a serious business where long hours and hard work are just two of the obstacles to success. Far worse aspects of day trading stocks, which are sometimes impossible to preconceive is the emotional stress that day trading inflict on a trader. New and intermediate traders experience this acutely and it is closely linked to the three factors which exist when day trading stocks. These factors are the realities of sitting down staring with increasing impatience at a computer screen, coming to terms with a losing trade or position and also the loneliness of being in complete control of the growth or destruction of your finances.

At the moment we are living what I refer to as a a traders’ market as opposed to an investors market. I am very careful about taking positions that I can’t liquidate quickly. No long term holdings for me at present. I’d like to be fully back in cash when I can look for the next breakout. I ride the trend while I can and get off… but often too early I’m afraid!

Despite these factors, which account for some of the main reason why so many enthusiastic traders give up day trading stocks, the rewards for those who can solve these problems can be vast. Furthermore, many professional day traders and investors argue that day trading stocks actually becomes quite boring and routine once you have become a successful and experienced trader. Boredom is a very low price to pay when you consider the wealth and personal freedom that day trading stocks can bring to those who approach it in the right manner.

In order to join the group of speculators who make money from day trading stocks it is important to form an action plan to defeat the potential problems outlined above. From a practical perspective, day trading stocks from your home PC, may or may not require long hours of analysis but for those relying on it for an income it is very likely that it will consist of vast amounts of screen time. Since most people day trade stocks during their local market hours they could spend up to 8 hours watching market data and graphs on their computer screens and much more if they choose other market times to trade stocks too. I admit, this is not so much different to your average office job although a crucial element which exists in day trading stocks but not in your average job is that one of the two guarantees an income whilst the other one does not.

The mental strength of mind needed to handle an early loss and remain focused without the pressures of needing to earn money eating away at your confidence and trading strategy is one of the assets of a successful day trader. The who have been day trading stocks successfully for a period of time have devised strategies to manage this stress and formulate coping strategies based around eating well (away from the computer screen) and exercise. Whilst these may seem like trivialities and fairly far removed from the exciting world of day trading stocks it is a mantra supported by the best traders and one which therefore should be taken notice of.

Day trading stocks is a stressful business, however, this stress and frustration is at its highest during the first few months when every trade seems to go wrong and the market appears to be ´against you´. This is the time when most new investors think of throwing in the towel and many actually do. For those who remain and persist, developing beneficial coping strategies and balancing their lifestyles to suit the emotional rigors of controlling their own financial destiny, trading becomes straightforward and even boring. Day trading stocks under these improved conditions will allow a trader to remove some of the obstacles which many fail to overcome.

Day trading stocks during traders own market hours should also not be compared the 9-5 office hours of salaried workers. The main reason for this is that a individual may not need to be day trading stocks and shares throughout the entire day. The negative outcomes of ´over-trading´ are the most obvious pitfalls with this strategy. Many successful day traders operate in certain windows of the day and always have profit targets from where they will stop trading once these have been achieved. This provides for a beneficial and positive life-work balance which is imperative when day trading stocks.

Beating the Odds

There can’t be many traders who don’t believe that they are going to earn steady if not splendid profits from their work. I hate to disillusion you, but you have to work at being successful. 90 to 95% of beginning traders give up in the first six months because they could not succeed.

Look at it this way, if you don’t believe me. Trading is a short term financial exercise, as opposed to investing when you can look for long-term growth. As such, pretty much every time you win, someone else loses. That lowers the odds to 50/50 that you make a profit. If you take off commissions and spreads, and the other costs of trading such as data feeds, then you see the odds are stacked against you. Your task, should you choose to accept it, is to be better than 95% of the others.

About the author


I first cut my teeth in the Square Mile in the winter of 2002. I was young, fresh-faced and straight out of university; keen but maybe a little naïve about the way the investment world really worked… A few years ago I discover a whole new world of opportunity: spread betting on the financial markets.

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