The name Forex, come from Foreign Exchange Market, which also referred as “Forex” or “FX” in short. Basically it involves a pair of currency. Meaning you buy a currency in exchange to another country currency.

For example if you visit Hong Kong from US. What would you do? Go to the money changer, use your US dollar to exchange for Hong Kong dollar right? By doing so you are actually selling your US dollar and buying Hong Kong dollar so that you can spend in Hong Kong. So if you return to US, you too will exchange your Hong Kong dollar to US dollar. Now you are buying back US dollar and selling your Hong Kong dollar. By now I hope you get the idea of basic currency trading.

So why trade Forex, you may ask? Well Forex is a 24 hours market and it is one of the largest markets in the world in term of daily volume. It trade volume range from 1 to 3 trillion USD every day. This is 6 to 8 times higher than the volume of the stock market in the world. It provides a lot of liquidity in the market. The large volume of participants also reduces opportunities for insider trading. To put thing to simple, there has NEVER been a case of complete currency collapse in a developed country.

For Forex trading is there is no restriction of short selling. Meaning you can buy (Long) or sell (Short). This mean you can easily trade in a rising or falling market.

Another great advantage of Forex Trading is leverage. Typically leverage increases your buying power. With this you are able to increase your total return on investment with less cash outlay. Of course increasing leverage increase risk too. However if you know how to manage your risk, this should not be a problem. Example if you have only $1000 dollar cash in a forex margin account, and a 200: 1 leverage, you can trade up to $200,000 in notional value.

Here is only some of the basic information on Forex Trading. To pick up forex trading, you may search more information in the internet or buy some books on Forex to read. Understand the basic foundation of Forex is a must!

Yeo Kian Poh

Pick up forex trading at http://pickupforextrading.com Eric Yeo is the creator of Pick Up Forex Trading

Day trading does not work anymore.

We all have the same information at the same time and all moves in short term time frames are random. We will look at this more in a moment but let’s first give you the reality check on all those trading systems that claim big gains.

They all make big claims but there not real gains there in hindsight on paper and you will always see a disclaimer. Tell me would you trust any system with this on it:

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

I wouldn’t but thousands do – this disclaimer allows you to make up anything you want and say hey it’s just a simulation!

What good is that? – We need to make money going forward and don’t have the luxury of knowing the closing prices.

Also why on earth would you trust someone saying how great their system is when they haven’t had the courage to trade it for themselves. Of course if it worked then you wouldn’t, even need to sell it judging by the track records the vendor would be rich beyond their wildest dreams – yet they offer you these riches for $100 or so bucks UMM.

You cannot tell where short term prices are going and that’s a fact and that’s why you never see a day trader make real gains – Your going to lose so don’t try. If you want to trade short term use a forex swing trading system.

Moves are short term a few days to around a week, you get plenty of action and it can be very profitable. You will find lots of swing traders who make money and no day traders.

To win you need to get the odds on your side and that means trading a longer term time frame. If you have not discovered swing trading check it out.

Day traders tend to be lazy or arrogant or think currency trading is easy – well its not that’s why 95% of traders lose all their money ( 100% in the case of day traders!) and of course you wouldn’t expect it to be with the rewards on offer

Fact is you need to get the right forex education and get the odds on your side and you can’t do that in a random trading environment.

Forex day trading will see you lose because you can’t get the odds on your side, so try swing trading and you can get the odds on your side and enjoy forex trading success.

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FOREX is a somewhat unique market for a number of reasons. Firstly, it is one of the few markets in which it can be said with very few qualifications that it is free of external controls and that it cannot be manipulated. It is also the largest liquid financial market, with trade reaching between 1 and 1.5 trillion US dollars a day. With this much money moving this fast, it is clear why a single investor would find it near impossible to significantly affect the price of a major currency. Furthermore, the liquidity of the market means that unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.

Another somewhat unique characteristic of the FOREX money market is the variance of its participants. Investors find a number of reasons for entering the market, some as longer term hedge investors, while others utilize massive credit lines to seek large short term gains. Interestingly, unlike blue-chip stocks, which are usually most attractive only to the long term investor, the combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors with a broad range of strategies.

How FOREX Works

Transactions in foreign currencies are not centralized on an exchange, unlike say the NYSE, and thus take place all over the world via telecommunications. Trade is open 24 hours a day from Sunday afternoon until Friday afternoon (00:00 GMT on Monday to 10:00 pm GMT on Friday). In almost every time zone around the world, there are dealers who will quote all major currencies. After deciding what currency the investor would like to purchase, he or she does so via one of these dealers (some of which can be found online). It is quite common practice for investors to speculate on currency prices by getting a credit line (which are available to those with capital as small as $500), and vastly increase their potential gains and losses. This is called marginal trading.

Marginal Trading

Marginal trading is simply the term used for trading with borrowed capital. It is appealing because of the fact that in FOREX investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. Marginal trading in an exchange market is quantified in lots. The term “lot” refers to approximately $100,000, an amount which can be obtained by putting up as little as 0.5% or $500.

EXAMPLE: You believe that signals in the market are indicating that the British Pound will go up against the US Dollar. You open 1 lot for buying the Pound with a 1% margin at the price of 1.49889 and wait for the exchange rate to climb. At some point in the future, your predictions come true and you decide to sell. You close the position at 1.5050 and earn 61 pips or about $405. Thus, on an initial capital investment of $1,000, you have made over 40% in profits. (Just as an example of how exchange rates change in the course of a day, an average daily change of the Euro (in Dollars) is about 70 to 100 pips.)

When you decide to close a position, the deposit sum that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.

Investment Strategies: Technical Analysis and Fundamental Analysis

The two fundamental strategies in investing in FOREX are Technical Analysis or Fundamental Analysis. Most small and medium sized investors in financial markets use Technical Analysis. This technique stems from the assumption that all information about the market and a particular currency’s future fluctuations is found in the price chain. That is to say, that all factors which have an effect on the price have already been considered by the market and are thus reflected in the price. Essentially then, what this type of investor does is base his/her investments upon three fundamental suppositions. These are: that the movement of the market considers all factors, that the movement of prices is purposeful and directly tied to these events, and that history repeats itself. Someone utilizing technical analysis looks at the highest and lowest prices of a currency, the prices of opening and closing, and the volume of transactions. This investor does not try to outsmart the market, or even predict major long term trends, but simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before.

A Fundamental Analysis is one which analyzes the current situations in the country of the currency, including such things as its economy, its political situation, and other related rumors. By the numbers, a country’s economy depends on a number of quantifiable measurements such as its Central Bank’s interest rate, the national unemployment level, tax policy and the rate of inflation. An investor can also anticipate that less quantifiable occurrences, such as political unrest or transition will also have an effect on the market. Before basing all predictions on the factors alone, however, it is important to remember that investors must also keep in mind the expectations and anticipations of market participants. For just as in any stock market, the value of a currency is also based in large part on perceptions of and anticipations about that currency, not solely on its reality.

Make Money with Currency Trading on FOREX

FOREX investing is one of the most potentially rewarding types of investments available. While certainly the risk is great, the ability to conduct marginal trading on FOREX means that potential profits are enormous relative to initial capital investments. Another benefit of FOREX is that its size prevents almost all attempts by others to influence the market for their own gain. So that when investing in foreign currency markets one can feel quite confident that the investment he or she is making has the same opportunity for profit as other investors throughout the world. While investing in FOREX short term requires a certain degree of diligence, investors who utilize a technical analysis can feel relatively confident that their own ability to read the daily fluctuations of the currency market are sufficiently adequate to give them the knowledge necessary to make informed investments.

Rich McIver is a contributing writer for The Forex Blog: Currency Trading News ( http://www.forexblog.org ).

Forex Robots

Have rules build into them and there simply plug and play time efficient and require very little trading knowledge.

There are some good ones about that are sold online but most (about 99%) don’t work and the track records are simply made up and simulated in hindsight. Most carry the disclaimer below, look out for it and forget it:

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

There are some that have been traded and tested and have real time track records but be careful – you still have to follow it with discipline and for this, you need to know how and why it works long term.

You need to be confident enough in its logic, to stick with it through periods of drawdown, if you dont understand how and why it works and have confidence in its ability to win longer term, your discipline will go and you have no system.

There are even some free ones that make money. I have written frequently on Richard Donchian’s 4 week rule and this incredibly powerful but simple system, is free! Look it up in our other articles.

Trading an automated trading system ( if you find the right one) is time efficient and easy – but you must have a disciplined and patient personality, to keep executing the signals in line with the rules and this is hard, when you had a losing period!

Manual Trading

There is a right way and a wrong way when trading manually – lets start with the wrong way.

The “shoot from the hip” news and story trader – He simply trades on a whim and of course as news is instantly discounted and his emotions are to the fore he losses.

The other trader is the trader who likes to do every trade manually but is still guided by rigid rules in terms of, executing his trading signal and money management.

I am this sort of trader and it suits me as I am involved and although I use rules I can pick and choose the best trades in terms of risk reward – this trading method is obviously my personal choice and each trader will know which method is right fof them.

You can make money with forex robots, just choose wisely and be prepared to have confidence and discipline in the system you follow. As a manual trader you still need discipline but it probably suits the trader who enjoys a challenge.

Which ever trading method you choose, remember to have a disciplined approach and make sure you employ rigid money management criteria, to lead you to long term currency trading success.

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If that is the case, it is unlikely to be the strategy that’s the problem. Profiting from Forex can be done through any number of tried and test strategies. Just purchase a training package from many of the reputable online traders or brokers and you will find them.

The main problem that stops traders from profiting from Forex is in the mind! Successful Forex trading involves a whole range of mind control skills and mental disciplines that take some time to develop.

So if you are still struggling after one or two years of trading the Forex, start to focus your time and energies not so much on searching for a new strategy or trading methodology, but rather on yourself and how you approach and manage trades.

Monitoring Emotional State

How can this be done?

By monitoring our personal responses and emotional state during the course of a trading day.

Once we have a strategy we have confidence in, it is merely a case of waiting until the setup appears where we can employ that strategy.

Here is the problem. The Forex market goes through long periods of consolidation and low liquidity. The anxious trader will desperately look for trading opportunities and deviate from the strategy they have selected.

So things may not be quite right, but it looks reasonably favorable so in they go only to be dismayed when the trade turns against them.

It takes much mental discipline to restrain oneself from going into trades that do not match the criteria the strategy demands.

Once in the trade, mental discipline is again required so the trade is managed properly.

Have you ever found yourself doing this?

You enter the trade after examining risk and profit potential. Your stop is strategically placed 25 pips from your entry point. Price starts to go against you. It gets dangerously close to your stop and you think to yourself, “the trade needs a little more room for maneuver so I’ll push back the stop by another 5 pips.” Price continues to pull back getting close to your new stop.

The novice trader now thinks, “Just another 5 pips to make sure I’m not needlessly going to get stopped out of this trade” and moves the stop back to 35 pips.

Almost predictably in this scenario, price continues stopping out the trade at 35 pips. The trader has now suffered a loss of 35 pips instead of 25 pips which was originally factored in.

Continuing to trade in this manner makes profiting from Forex pretty remote! It takes mental discipline to stick to the plan!

Winning And Losing Responses

Then come the emotions associated with winning or losing.

The newer Forex trader will feel emotions of elation on getting a winning trade. In fact, the whole day can appear bright and cheerful with just one winning trade.

On the other hand, a losing trade can put the same trader into the depths of depression or despair. The day seems grim and hopeless leading to flawed judgment on the next trade which also goes wrong and compounds the attack on the trader’s level of confidence.

It takes mental discipline to keep the emotions in check trying to avoid feeling either elation or despair on the basis of a winning or losing trade.

The disciplined trader approaches order entry almost mechanically realizing there will be winners and losers and that the strategy, if adhered to, will in the end win out!

So how can we develop this tough mental condition and strong mindset if ever we are to see the day when we are actually profiting from Forex?

Just as the trader will keep monitoring the charts, watching price action and candle formations during the course of a trading session, the same monitoring activity needs to be applied to the mental and emotional condition.

Self-Monitoring Sessions

This can be achieved by constantly asking questions of oneself. For example:

• What am I feeling right now?
• Am I in a relaxed state or am I anxious, agitated, or frustrated?
• Am I desperately looking for trading opportunities when no high probability trades are setting up right now?
• How did I react after my last trade whether it was successful or not?
• What can I learn from that and how can I better handle my emotions next time?
• Am I enjoying the experience or am I nervous of the markets?

Many sports participants and Olympic medalists spend huge amounts of time and resources on getting the right mindset. Coaches work with them to develop mental discipline and mind conditioning so they perform well under pressure and become aware of their own emotional state and feelings.

Often, it is not so much the level of skill or physical strength that makes the difference between the winner and the rest, it is competitor who has mental toughness who has the edge!

Focus On Mindset

So if you have been trading the Forex for one or two years already with mixed results, why not focus on your mindset.

Select a strategy that has a tried and tested track record by other traders and professionals who are already profiting from Forex, and then spend most of your time and energy developing the mind skills necessary to get into the small percentage of traders who actually make money on the Forex!

To learn how to preserve your mental and emotional resources in addition to your account equity click here:

http://www.vitalstop.com/Forex/Advisor/forex-day-trading-mental-equity.htm

Do you know the important lesson Mohammed Ali teaches us about Forex trading? Read it here:

http://www.vitalstop.com/Forex/Advisor/forex-online-trading-mohammed-ali.htm

For a free pivot point calculator, Fibonacci calculator and the best free economic calendars click here:

http://www.vitalstop.com/Forex/tools.html

Before we take a look at our free one, it lets see why most paid for ones fail to deliver and why you’re better off not paying for one.

Generally, they have never been traded and come with a simulated track record, using past data. This is the disclaimer you will normally see:

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

What generally happens is a system doesn’t make money on first attempt, so the vendor adds more rules in and bends the system to fit the data. No two pieces of data replicate themselves exactly again and the system ends up wiping out the user.

This is known as curve fitting and most sold systems do it.

Now let’s look at our free one.

Its one rule that’s it so you can’t bend one rule by its very nature!

A Simple System for Profits

Now let’s look at the system. It’s called the 4 Week Rule and was devised in the late seventies by trading legend Richard Donchian.

Originally it was devised to work on commodities but works on any trending market and currencies trend well.

Here is the rule:

Cover short positions and enter longs when a price exceeds the highs of the previous 4 calendar weeks. Close long positions and go short when a price falls below the lows of the previous 4 calendar weeks.

That’s it!

Very simple – but it makes money and many of the world top traders have used this system and still use it today. Simple systems work best as they are more robust in the face of ever changing brutal market conditions.

The system works great in any trending market and will put you on the side of every major trend of course when the market is not trending it can suffer drawdown and here you may wish to alter the exit rule.

Rather than exiting on 4 weeks you can try 1 or 2 weeks then go long or short on the next 4 week trading signal.

This system is a long term trend following breakout based system and unless markets were to stop trending long term it will continue to work.

Its free so don’t discount it, trading legends such as Richard Dennis were fans of it and if its good enough for him then it really is good enough for you – it works.

It’s a simple highly effective logically based system that anyone can understand and use and you should consider it. Try this currency trading system in a demo account and follow it rigidly to prove the profitability to yourself and make it part of your forex trading strategy for success.

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For free 2 x trading Pdf’s, with 50 of essential info and more on the 4 Week Rule and Currency Trading Robots visit our website at: http://www.learncurrencytradingonline.com

Make no mistake; this is the largest government bailout of a financial company in U.S. history. The Government will immediately invest about $30M of liquidity into these companies, but in reality most experts agree that the Government will invest at least $250 Billion into the two firms before it is over. These are companies that reported about $14 Billion dollars in losses over the last year.

Why would the Government do such a thing you ask?

They never had a choice!

Had the Gov. not stepped in now and engineered this indefinite Gov. “conservatorship” the fall of these two behemoths was inevitable. Had we seen either or both of these companies fall it would undoubtedly have been the end for the U.S economy and likely a catalyst for a global meltdown. This is big stakes folks. There was no way Uncle Sam was going to let these companies fall, and hey if you are going to bailout the biggest financial firms in the country… why not make a little money while your at it right!

The Gov. will be given nearly 80% of preferred stock in the companies with a guaranteed 10% annual return. All those other investors holding stock are now in 2nd place if anything should happen being Uncle Sam

What does this mean to the average Joe?

Well here is the good news. The day after the Feds shot their bazooka at the financial meltdown, the 30 year interest rates fell from 6.25% down to 5.5% overnight! This is in large part because interest rates are risk based. The lower the risk the lower the rates. Now that Uncle Sam is taking charge the market is GUARANTEED by the Fed Gov. to not fail. No matter how much cash it takes to stay afloat Uncle Sam is willing to foot the bill. This means far less risk and therefore far lower rates. We are predicting that very soon we will see par interest rates in the low 5% range!

This not only provides lower rates but also more liquidity into a strangled credit market. The spigot just got opened a little further and we are now drizzling mortgage financing instead of dripping it. So in addition to lower rates and more liquidity we are predicting that the actual cost of banks lending money will decrease which should drive some investor interest back into the mortgage backed securities. This “could” result in slightly less stringent underwriting standards allowing more people to snatch up some of the excess housing inventory that is hammering home prices.

New construction has already decreased significantly so lower rates, more affordable loans, and more accessible financing could be the catalyst to get us on the road to a housing recovery.

What about the future of Fannie & Freddie?

This is where the Gov. is flying blind. Their hands were forced to step in and their “conservatorship” is open ended. This means that the truly hard decisions will be left to whoever becomes president of the United States in our next elections cycle and their Congress. Senator McCain has hinted that he would like to see the companies broken up or at the very least down sized considerably. Senator Obama on the other hand has seemed to tend toward more regulation but allowing them to remain more unchanged.

Yet another reason to stay on top of politics this year and delve deeply into the policies of our two candidates!

Here is to hoping you and your family can take advantage of the lower rates and cheaper financing… hey… you paid for it!

Christopher Burns

Owner – Five Stars Mortgage

Residential – Commercial Mortgage Loans http://www.fivestarsmortgage.com

FOREX trading requires very little startup capital, knowledge that can be acquired from excellent online sources for only a modest investment, a computer and an internet connection. It is one of the easiest businesses for an individual to get started in. Note and caution: in addition to the previously stated items, successful trading also requires intense self-discipline and risk management. It should not be considered a get-rich-quick project, but a source of steady part time (or full time) work with good income potential.

In 1978 the International Monetary Fund mandated the free-floating of currencies. That means that a currency, like the U.S. Dollar, Swiss Frank, or Euro changes in value minute to minute based on the laws of supply and demand. That decision also opened the currency markets to more participants than before. The volume of currency traded each day has grown dramatically, and this is a good thing for small traders who want to take small risks and get in and out of the market fairly fast. In 1977 the daily value of currency traded between banks was about U.S. $5 billion. By 1987 this had grown to U.S. $600 billion, and by the year 2000, it was up to U.S. $ 1.5 trillion.

Eventually corporations joined the banks in trading. This added to the volume and also added to the liquidity of the currency markets. Liquidity is important to keep from getting trapped in a losing position without being able to get out, or riding a nice profitable move and then seeing it disappear while you attempt to get out. The ideal market to trade is one that lets you in quickly and also lets you out quickly.

Now, even individuals can compete on relatively even footing with large central banks. The key is access to online information and online trading services. It may sound risky and complicated at first, but can actually be quite simple if you don’t get greedy and invest the time and money needed to learn the basics.

An advantage of currency trading over trading something like stocks is that currency markets are open almost 24 hours per day, so you can work whatever hours you choose, even the middle of the night. Also important is the fact that you don’t need much money to start. Many brokerage companies will allow you to open an online trading account for only $1000, and most of them will also let you practice for free with simulated trading accounts.

It is very important to learn the basics and also to have a well-practiced plan before you put real money into your new part-time business. Go to the library and read all the books you can find on trading and investing, then take time to surf the internet looking at forex trading courses (if you want to be a profitable trader, you need to invest a little money up front in education in order to avoid learning the ropes the hard way: by losing real money in the market) and selecting a good forex broker.

After you learn everything you can from a good online course and set up a trading account, be sure to trade “on paper” in real time without real money for a month or two to get all the bugs worked out of your strategy before you put real money on the line. Don’t let anyone tell you it is easy, but with hard work and discipline you can enjoy a nice supplemental income by trading.

Have you absorbed all the trading knowledge you can find at the library? Excited about getting your feet wet in the forex market? Go here for an excellent forex training course and visit http://www.forexprofitsmeister.com for more trading pointers.

When George W.C. wanted some other commodity to take the place of cotton in the south, something that would bring in more profits, he chose soybeans. It was only later that he discovered that soybeans had a variety of uses other than just as food! They could be be employed in the preparation of varnishes, paints, linoleum, plastic, inks and also fuel!

Realizing its huge potential, the Chicago Board of Trade put soybeans at the top of their list of popularly-traded commodities. Also, soybeans are easy to grow. Today, with the help of the South American soybean sector (more soybeans are grown here), the Board has gone in for trading soybean futures and options.

What are the advantages to trading soybean futures and options?

(1) The trading soybean futures and options market is open to one and all, especially interested investors. As a matter of fact, business owners whose businesses are closely linked to the production or acquisition of soybeans should find this an attractive proposition!

(2) There is no need to have great knowledge about agriculture or agricultural products. This is after all, a matter of trading in a particular commodity. People who sign contracts related to trading soybean futures and options will discover that thay can handle their trading tools much better, thus boosting profits.

(3) Trading soybean futures and options can be carried out at physical locations, as well as online over the Internet. Isn’t this convenient?

(4) These trading contracts offer transparency, arbitrage opportunities, enhanced hedging efficiency, the existence of a worldwide benchmark, greater liquidity and financial integrity (as they are supported by the Chicago Board of Trade).

(5) Soybean oils are primarily responsible for bio diesel fuels. And if one looks around, more and more people are opting for non-pollutant and alternate sources of energy now-a-days. The future therefore looks bright, since soybeans may become a greatly desired commodity soon!

(6) Soybeans coming first in the race can be attributed to the fact that fuel products are becoming more and more expensive; this is a more viable option!

(7) Of course, price fluctuations are always there, and businesses dependent on soybeans as a raw material will be constantly wary of them.

(8) Supply of soybeans is dependent on how much can be produced during the springtime. Unpredictable weather conditions also play a role in the supply. So the supplier cannot guarantee the supply of soybeans throughout the year!

(9) Despite the ups and downs concerning supplies, it is heartening to note that the demand for soybeans is not going to come down. So investors need never fear that the market value of soybeans is going to be affected. As the demand increases, price will also increase!

Thus, as experiments to use soybeans for different purposes are underway, trading soybean futures and options promises to be a lucrative business!

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What is day trading? Basically it is daily, online stock trading with very short investment. The individuals who do this day in and day out are called traders, not investors in the traditional sense. A day trader is someone who will buy a stock that has high volume and liquidity and will sell that same stock within a few minutes up to a few hours.

Day trading happens only during the day. Those who do day trading usually stay glued in front of the computer and monitoring which stocks have a fast turnover. During the day trading, they quickly buy a large number of stocks at a time and sell it once they see the stock gain within the day. Day traders will make a purchase of a stock, hold it for only minutes watching constantly for the stock to go up or down, selling if it goes down only two or three cents and holding if it goes up to about five or six cents and selling. The stock is almost never held over night as there are many other opportunities and a stock that takes hours to move is not worth holding.

Day trading can be a very high paced and stressful lifestyle. There are millions of day traders across North America but it can be a very fast way to lose everything. Some people are making over $5000.00 a day but it takes months and sometimes years to learn and master day trading.

The broader meaning of the term day trading includes those who trade daily from their homes or offices, through Internet brokerages. These day traders might buy and sell stocks in minutes, but might also hold some overnight or longer. The latest buzzword for this is “swing trader,” those who keep a stock within in a few days before finally selling them. To some, particularly the so-called bandits, day trading is just a numbers game. They do little research and just watch for moving stocks with good spreads. Others are more scientific about it, relying on news and technical analysis to catch everyday price fluctuations.

Day trading requires a certain amount of capital. Generally, day trading should have enough trading capital to buy at least 1000 shares of any given stock on any particular day. There are very few stocks priced under $20 that have the degree of liquidity necessary to make them suitable for day trading. This means that a novice day trader should normally have day trading capital of at least $20,000 to start. In addition, the new day trader should treat this as 100% risk capital and should not have to unduly worry that the whole amount of this capital may be lost very quickly.

You must also be aware that not all stocks are suitable for day trading. Day trading should never trade unlisted or thinly traded (low volume) stocks. These stocks have poor liquidity and hence a higher price volatility. This may make it hard for you to exit your day trading position quickly at a fair price. Trade only high volume, well-known stocks.

About The Author
Michael Sanford has a wealth of trading knowledge available at http://www.everything-trading.com.