What is day trading?
Day trading is simply the buying and selling of any financial instrument in the same trading session. This is different from investing or swing trading. In the former, the instrument, usually a stock or bond, is held for an extended time, sometimes many years. Swing trades extend over days, weeks and sometimes even months.
Day traders seek to capitalise and profit from the many price moves that occur in most instruments every trading session. For example, there have been many days when the Dow Jones Industrial Index has moved by more than 100 points. A move of that magnitude can generate literally millions of dollars in profits for an astute and capable day trader.
Day traders can and do trade everything from stocks to soy beans, currencies to corn and metals to market indices. Your Trading Room coaches trade Commodity Futures and Foreign Exchange currencies. Futures, simply, refer to a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future. Specifically, they trade market indices around the world and currencies (commonly known as Forex or FX).
Most people believe that investing in property or shares is safe and that day trading is only suitable for the mega-rich or criminally insane. But the reality is that trading futures allows for easy entry on short or long positions. Those holding shares in a bear market (a prolonged period in which investment prices fall, accompanied by widespread pessimism) are actually in a much more precarious position. Volume often dries up making selling difficult. That's why prices fall! Sellers drop their 'ask' in order to attract bids from buyers.
Electronically traded futures markets such as the eMini S&P 500 and the DJ EuroSTOXX 50 are among the most liquid in the world. Entering and exiting a position is virtually instantaneous. Forex turnover is an estimated 3 trillion dollars a day. Slippage, where you achieve a lower sale price than asked, is actually very rare.
Futures contracts allow for highly leveraged positions. Of course, if traded without a logical exit strategy, leveraging can quickly contribute to a trader's demise. However with sensible money management using a strict stop loss strategy, leveraging enables a winning trader to make greater profits with a much smaller risk. The Truth about Day Trading - How to Trade your Way to Financial Freedom explores these strategies in depth.
Brokerage for electronically traded futures contracts is a fraction of the cost of trading shares. The world's electronically traded futures markets are available 24 hours a day, five days a week. And the really enticing part is that traders can experience it all from the comfort of their home using a typical home computer.
For more information on trading successfully, visit Forex Trading Academy to download this free report, The Truth about Day Trading .
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