How to Day Trade Online

Day traders buy and sell stocks, currencies or commodities online throughout the day hoping to reap quick profits. Execution speed is paramount. Online day traders are not linked directly to the market through their home computers. When they press "Enter," their orders are sent to brokers, who then send the orders to a market for execution. By the time the orders reach the market, prices could vary greatly from quoted prices.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Brokerage account (optional)
• Monitors
• Trading software
• Forex mini account (optional)
• Computer

1. Equip yourself with a good trading computer (you need at least 1,024 MB of RAM and a 100 GB hard drive), at least three monitors (flat LCD screens are easy on the eyes) and a fast Internet connection. Online day traders must be able to receive streaming, real-time information for quotes and charts. DSL, cable modem or a T1 line is better than any size phone line modem.

2. Purchase direct-access trading software. This allows you to skip several time-consuming steps when trying to execute your buy/sell orders.

3. Learn day trading basics. An online day trader must know the difference between "bid" and "ask," between the New York Stock Exchange (NYSE) and the NASDAQ and what "selling short" means.

4. Choose an online broker. Your broker is responsible for executing your trades. Look for a brokerage firm that offers instant execution of your orders, high leverage with a small margin deposit and low spreads.

5. Deposit the hefty minimum amount required by law into your brokerage account when you plan on day trading securities.

6. Open a Forex mini account with the minimum required amount when you plan on trading currencies.

7. Make sure that the stock quotes and account updates you are receiving are real-time and not delayed. Speed is of the essence when you day trade online.

Tips & Warnings

• Ask your broker about contingency plans for executing trades in the event of website outages, delays or any other interruptions. Make sure that the firm has a backup plan.
• If you want to focus more on day trading and less on handling orders, stick to day trading currencies. You won't have to concern yourself with order routing or worry about where your order will be sent.
• Be very skeptical about any day trading company ads that promise you risk-free investments and quick profits. More online day traders lose money than make money. Never invest money you can't afford to lose, such as money from student loans, your child's college fund or your retirement account. If you trade on margin, you may lose much more than your original investment.

[britenight]

on 3/25/2008 As is usual this is a very helpful, straight forward ehow article, however, if you want more detailed information about help choosing an online broker I found www.online-broker-review.com especially or www.consumersearch.com/www/internet/online-brokers helpful sites to look into.
Happy trading ya'll...