Getting Started With Day Trading

Oct. 18, 2010 - PRLog -- When all the positions a trader takes are closed during the same day before the market closes, that's called day trading. There are a large number of people who dabble in day trades from home. But it needs a lot more expertise than ordinary trading, not to mention a rage of tools and market data. That said, most of the tools are made available by brokers, and trading software can make things even easier.

Day trade volumes tend to be larger, owing to the shortened time frame and small fractions in price movement that are taken into consideration. This makes it critically important for traders to be careful. For example, traders using margin accounts and leveraging can enter trades worth several multiples of the account value.

The safe way to get started is to have a fallback arrangement. As a rule, combined value of all trades at any given time should amount to only a portion of the account value. To remove the human error and emotional aspect, use well-defined trading strategies that allows for entering and exiting trades at specific prices and can be implemented using trading software.

These order types are of many types, but very few traders will ever require more than 3 or 4 of the most popular types. The easiest one is the Market Order. Under this type, the order is placed at the current price even if the market has moved past the price the trader wants.

A Limit Order is where the order is placed only at a specific better price, or not at all. A Stop Order works the same as a Market Order, but only after a specific price has been reached. Stop Limit Orders are placed at and after a specific price.

New traders who want to start trading should start by getting a computer with broadband internet. Choose a broker depending on the fees and commissions the broker charges, and on the kind of tools the broker offers to internet day traders. Some traders focus specific markets, so that should be taken into consideration too.

Before getting started, it might also be a good idea to look up some trading strategies such as arbitrage, swing trades and trading news. While it isn't exactly necessary to spend on paid trading tools until the trader has some first hand experience, it is also true that institutional and professional traders have access to a lot of stuff. Day trading can really pick up momentum with the help of tools like trading software and market data.

Visit this guide to investing to learn more about different types of day trading: http://www.canadabanks.net/default.aspx?article=Day+Trading

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