Day trading is basically online stock tading with very short invesetments horizons. Short as in munites. Because they are doing this day in and day out, they are called traders, not investors in the traditional sense. In the past, day trading tools were only available to professionals in the field. But thanks to the power of the Internet, everything you need to get started is now conveniently online.
Some work next to eacher other in trading rooms, while others work from their home offices. It’s no surprise that day traders execute over a hundre trades a day with their glued to the computer screen tickers. This is possible because they typically don’t hold stocks overnight just in case there’s bad news. In fact, they may holds stocks for no more than a minute to limit risk.
The broader meaning of the term day trading includes those who trade daily from their homes or offices, through Internet brokerages such as eTrade. 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 trading, with an investment horizon of 1-5 days.
Most of the day traders focus only on the NASDA Stock Exchange. It’s generally more volatile than the NYSE or AMEX, because of this it offers more opportunities to play between the repetitive highs and lows during the day. But volatility also carries high risk, so one must watch prices like a hawk. In the time it takes to grab a cup of coffee, a stock may move 1/2 point or more.
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