So You d Like To DayTrade Or Not
Below is a MRR and PLR article in category Finance -> subcategory Stock Market.
So You'd Like to Day Trade ?" Or Not
Exploring the World of Day Trading
Summary
In the exhilarating days of the dot-com era before 2001, when stocks could soar 30% to 200% in a single day, savvy traders had a fleeting opportunity to capitalize. Those with insight and a speedy electronic brokerage could dive in, buy shares, and sell them the same day. However, only about 1% managed to consistently profit.
I witnessed one trader make a million dollars in a day shorting Corel, while another lost heavily by clinging too long to the WWWF IPO.
The Reality of Day Trading
So, you're considering making a living through day trading? It’s important to separate the fantasy from reality. Despite dramatic tales of day traders losing everything and their tempers, the allure remains.
During the heyday of the dot-com bubble, monitoring the market before it opened allowed traders to identify which stocks were trending and why. With a fast electronic brokerage system, one could buy and sell within the same day, but this was far from a guaranteed path to wealth.
The Harsh Truth
Consider this: since 2001, factoring in inflation, traditional investment might have served you better than risky trading. Should you abandon the stock market altogether? Not necessarily. With a solid investment strategy using simple formulas, you can still earn significant returns?"30% or more annually. Over 17 years, $11,000 could grow to over a million dollars.
Long-Term Investment vs. Day Trading
While this isn't about day trading, patience is required to stomach the market’s fluctuations. For those still tempted by day trading, the strategy hinges on news that everyone finds staggering:
- A company discovers a cure for cancer.
- A corporation invents a pill for eternal life.
- A car company produces a vehicle powered by water.
Getting an Edge
To succeed, you need this pivotal news before the masses. Subscribing to real-time market news for around $10 a month is a start. When you catch wind of groundbreaking news at 6 AM Eastern Standard Time, ensure it’s fresh?"new data, not yesterday’s.
Making the Play
With disposable income, carefully buy shares and always employ a stop-loss to protect your investment. Most electronic brokerages allow early trading as soon as 6 AM EST. Sell before 9:28 AM EST when other traders are just getting started, potentially doubling your investment.
Final Thoughts
Resist the urge to continue trading the same stock after the market officially opens. Market makers are sure to influence the stock as the day progresses. Keep in mind, significant single-day gains are rare post-2001, as are prolonged stock surges.
Never hold a stock overnight based on a sensational news item?"prices often fall the next day. Additionally, avoid buying IPOs on the first day. Notably hyped IPOs often disappoint by the second day, benefitting only the brokerage firms.
Conclusion
If you have money to spare, a strong constitution, and the time to follow market news from 6 AM to 9:28 AM EST, perhaps day trading is worth exploring. Just be aware of the risks and challenges that come with the territory.
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