subject: Day Trading - Why Start Day Trading for a Living? [print this page] Day trading is the business activity or process of buying and selling so-called financial instruments within the same trading day. The term "financial instrument" is a collective term for stocks, stock options, currencies as well as futures. Futures include equity index, interest rate and commodity future. The day trader or active trader, which are names used to call entities who engage in this business, are active only in the period between the opening and closing of the market for financial instruments.
Who May Engage in It
Day traders may be organizations or independent individuals. In fact, before electronic trading, day traders are mostly financial firms and professionals and specialists who make a living through investment and speculation. However, thanks to modern online trading and margin trading (or trading using borrowed money), even common people engage in day trading in the comfort of their home.
Why It is a Good Way to Earn a Living
Day trading is an attractive option for earning a living because it can be managed into a consistently profitable activity. It is also possible to make big gains over short periods of time from day trading. Some day traders are reportedly able to rake in millions in a year.
Adopting day trading as one's profession or part-time profession is now possible, thanks to the many opportunities available for educating oneself about it. Nowadays, there are a lot of entities and experts offering their services to those who are serious enough to learn the tricks of the trade. These include, among others, basic aspects of the business and some trading strategies. The more esoteric and technical parts of these are techniques of analysis, risk management, and some trading psychology, to mention only a few. An example of a trading strategy is trend following, which rests on the assumption that a current trend (rising or falling price) will continue within a certain period.
A Word of Caution
The layman who is just about to step into this exciting world of day trading is best advised to note that while this business can yield great returns, it may also lead to disaster. The trade has its own rules and usually transgression of these rules could lead to losses. These rules are basically founded on a few basics: discipline, sound financial management, adequacy of capital for managing risk, and common sense in selecting an instrument to play in. In this sense, day trading is like gambling. It is played with common sense, restraint and a capacity to absorb losses.
Day Trading - Why Start Day Trading for a Living?
By: Jared D. Ingram
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