How to Day Trade Online Stock & Options
Day traders are a special breed of investors who sit in front of a computer every minute the market is open and buy and sell stocks, options and other securities in the hope of profiting from changes in the markets. There are huge profits to be made for day traders who are willing to do their homework and take a long-term, disciplined approach to investing. There are also huge losses in store for those who let their emotions get the better of them and trade in a haphazard manner--the fact is, there are no guarantees in the markets. All day traders must use a licensed broker to place their trades for them, so the first step in becoming a day trader is to open an account with a broker. You'll also need a good computer with high-speed Internet access--you can't afford to wait for pages to load.
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Instructions
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Take a class or two or do some online trading to learn how to trade securities effectively. Tradeking and Investools both offer training in the basics of day trading and how to interpret and follow the markets. Check out your local community college or university for classes.
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Choose a brokerage firm to trade through by looking through online lists maintained by websites such as Investorguide.com (see Resources). Compare commissions, quality and depth of research and customer and technical support in making your decision. Open an account with the broker of your choice and fund it with either a transfer from another account or an initial deposit of cash or securities.
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Trade your securities according to a disciplined, long-term program. You don't have to buy and hold all of your investments, but you should consistently make trades that follow your investment objectives. You can use candlestick charting, which allows you to make trades based on certain patterns that show up in the graph of the stock price as it changes from one minute to the next. Or become a contrarian trader, who does the opposite of what the rest of the market is doing, such as selling when everyone else is buying.
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Read a few books on the psychology of investing and learn what type of investor you are. If you are impulsive or impatient by nature, some trading programs may not be right for you. Greed and fear are the main factors that drive the markets, but those who can rise above these emotions are the ones who make the most money over time.
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Keep up with daily market movements by reading online news sources such as "Barron's," "The Wall Street Journal," "USA Today" and the news on your broker's website. Interest rates, political events and natural disasters, can drastically alter the markets from one moment to the next. Be prepared to treat online day trading as a full-time job that requires several hours of looking at a computer screen each day.
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