Archives: 2008 May

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How do you become a stock day trader? Day trading is the process of buying stocks, currencies or futures, and selling them on the same day. Out of the transaction, a day trader expects to earn a profit.

While there are some who say that there are more losses than gains in day trading, there are still many others who swear by the system and have continued to reap its benefits. Here are some advantages of day trading and how to become day trader, as related by day trading experts.

One advantage of day trading is being able to work on your own. You are your own boss. You don’t need to consult with others before making a decision. After all, should you fail, you are the only one accountable for that loss. Because there is no one to check on you, it is therefore important that you have the self-discipline and hardworking attitude to know the business well. You must also be able to put your emotions on hold as you make your decisions.

I can’t help but think that a final straw that dramatically breaks the backs of world financial markets is on the way. Once that straw arrives there will be little that Ben Bernanke and the Fed can do about it. Extreme unwarranted optimism will turn to black hole pessimism overnight.

So far the stock market has performed well after the massive injection of liquidity engineered by Ben and his good buddy at Treasury, Hank Paulson. It’s amazing what billions of Dollars in fat cat bailout money will do. You have to give them both credit for shoring up the crumbling foundations of an overextended financial system. Good work, men. Bravo.

However, unfortunately, the opening of the Fed’s discount window to non bank financial institutions, cutting fed funds and discount rates, and other heroic measures have done little if anything to address the core problems. Banks and other financial institutions are still sitting upon billions and billions of dollars of sub prime mortgage exposure, credit card debt exposure, student loan exposure, car loan exposure, and the granddaddy of them all, mountains of derivative financial instruments that are marked to only make believe evaluations.

There are certain characteristics in a person that separate the line between successful day traders and easy losers. In addition to having good emotional control, above average I.Q. and having a good reserve of risk capital, successful traders also have traits and characteristics that are quite hard to develop for some but seem to be naturally available to others. Here are a few of these notable winning characteristics:

They have a definite business plan:

All business people, including day traders, should have a business plan. This helps define what decisions to take when faced with a certain condition. This plan helps them make the proper decisions that will lessen their chances of bankruptcy while increasing the probability of earning. A business plan is a guide, more like a personal manual, that allows a person to look at his business in its most important aspects. Day trading is a business and should be treated as such. Just as you would not open any other business without a comprehensive plan, you should not enter into day trading without a list of your objectives or realistic expectations backed by a business plan.

They are good mangers of their money:

There is one thing in common among winners and losers in any gambling game. Gamblers will continue to gamble regardless of what happens. And what are the commonalities between gambling and day trading? Simple, there are losers and winners, and most day traders are gamblers.

Despite the fact that gambling and trading are two very different things many traders seem to behave as gamblers instead of day traders. In gambling the winner would like to believe that he has an unstoppable streak of good luck and will try to ride his momentum until he gives all his winnings back to the casino. The loser, on the other hand, will try to get out of their bad luck by risking all his money in belief that he will be able to win back all the money he’s lost. In day trading unsuccessful traders work in this manner.

True trading is not like gambling. Unfortunately, most traders who have not reached maturity tend to act in this manner and over trade with the same make or break objective of a gambler.