How do Futures Work?
Those that succeed encounter a severe Where can one find information on condo insurance? (bangkok.thaibounty.com) learning curve. Once they gain experience, traders often take up day trading professionally, either as part of a larger institution or as lone rangers. Those who adopt a part-time approach still treat their trading as a business. Institutional day traders work shoulder-to-shoulder with other traders in large, computer-laden trading rooms. Either way, it’s a full-time occupation. They set a schedule — and follow it religiously. Part-time day trading is possible, but difficult. Individual day traders work from their homes or offices. This discipline distinguishes them from hobbyists or those who experiment with day trading as a form of gambling.
News events and corporate announcements often drive this market volatility, so traders must be available and ready to respond at a moment’s notice. In between the two extremes — investing for years and trading in seconds — exist other investment horizons and other types of trading. Swing trading refers to holding a stake in a stock or commodity for several days. Unlike investors, who may wait until logic prevails or for additional information becomes available, day traders move quickly, making decisions in minutes, even seconds.
Once the margin account is opened, a trader can borrow up to 50 percent of the purchase price of a stock. Another borrowing strategy is selling short. Both leverage and selling short carry certain risks, and both can result in a day trader losing his assets and being asked to pay back those he borrowed. This is also known as buying on margin. In this case, the trader looks for a security that is going down in price (as opposed to the more common practice of buying low and selling high). A day trader who sells short borrows a security and then sells it in the hopes of repaying the loan by buying back cheaper shares later on.
Leverage: The use of borrowed money to increase potential returns. Closing Out: The process of completing all transactions at the end of a day. First, let’s be clear about what day trading isn’t. Volatility: A measure of how much the price of a security will vary over time. Initial Public Offering (IPO): The first sale of a corporation’s stock. To reduce exposure to risk, day traders typically won’t hold a position overnight. Liquidity: The ability to buy and sell an asset without affecting price levels.
