Day Trading

In the current climate of extreme financial austerity and vicious cut-backs, people are naturally searching for methods of supplementing their earnings. It is difficult enough for those who depended on overtime that no longer exists, but it is even harder on those who have lost their jobs. There are two main avenues that people are attempting to investigate.

These are: setting up an off line business within their own field of expertise and attempting to make money on line. Within the 'making money on line' route, there are three main possibilities that individuals are turning to: affiliate marketing; the stock exchange and Forex (foreign exchange markets).

In this piece, I want to take a closer look at trading stocks and shares on line and in particular, day trading, which is the buying ang selling of stocks and shares within a twenty-four hour period or even within the same trading session. Some traders extend the period to mean a week, but to me 'day trading' represents a day.

Trading stocks and shares, let's just cal it trading shares from now on, can be a profitable means of earning money, but as everyone knows, there is not really any such thing as 'easy money'. It is not the trading per se that is a problem - far from it, brokers have made it very easy for individuals to trade on line.

Type 'trading shares' into Google and you will get inundated with opportunities for trading on line at a couple of clicks of a mouse. There is little to choose between the brokers, so it is best if you can choose one that operates in your country so that you understand the laws controlling it, unless you want to trade in the shares of a country not normally covered by brokers in your country.

Once you have chosen your broker and funded your account the excitement, and the danger, starts. The danger of losing your money, that is.

You see, when just rich people traded shares, they usually paid a stock broker to do it for them. There still are such institutions - many of them, going under different names, like mutual funds and investment trusts and there are also stock brokers who have a select clientele, but we are not talking of those.

The majority of day trading is done either by top professionals or by working class people. The professionals usually work for huge businesses like pension funds and the like with heaps of information, whereas the majority of people who engage in day trading do so at their computers at home

Under normal conditions, individuals or businesses, buy shares because they think that they can see a long term up-turn in that company's or that sectors future. This takes knowledge - not insider-knowledge, but a deep understanding of what is going on in that company or that market. This is subject to error, of course, but if you are in for the medium term, say a year or more, circumstances could swing in your favour, if you have the time span a little wrong.

If you are day trading, you do not have the luxury of time.

As a child, I once bought 50 1946 English farthings, because a coin dealer told me that he would pay a pound each for them, if |only he could find some. I knew someone who had a hundred at forty pence. I day traded and earned some money.

The point of the story is, how do you get that knowledge? Well, it is not simple. It takes dedication. It takes research and it takes work otherwise it is only gambling and most gamblers lose.

Day trading is the most difficult kind of trading in shares and no real trader would recommend it to anyone. However, it can produce instant profits and naturally, it can tie your money up, if you have made a wrong decision and have to wait for the right time to sell.

Day trading is very risky and not for the faint of heart.