The rewards are incredible for those that do it right, but for those who make enough mistakes it will take everything they have and still not be satisfied. Day trading is the practice of buying and selling securities and other financial options. These transactions are usually completed within the same day. Options that are typically traded include stocks, stock options and currencies. For the most part, day traders focus only on short term trading and can consist of several trades in a single day. Because of the high volume in trades day traders are given large discounts through trading brokerages.
Day trading gained momentum and notoriety during the “Tech Bubble” a period of bull market activity from 1997-2000. During this time even the most inexperienced and casual of traders were making large profits. Usually a day trader would have a certain amount of money and would basically borrow the rest on margin. During this time most day traders didn’t even find it necessary to have a solid strategy. “Buy in the morning and sell in the afternoon” was the basic game plan for many. Reality hit the market in March of 2000. Since most the day traders at the time were inexperienced, they began to lose large sums of money quicker then it was gained. Most of the people relying on day trading as a source of income ended up completely broke and in some cases destitute.
Day trading is so risky that it has been likened to gambling. Compared to the number of day traders, very few are able to make consistent profits. The primary factor that contributes to such high risk is that the funds to trade are borrowed on margin. Due to this fact money management skills are a necessity. An experienced day trader knows that sometimes they can’t afford to wait for the stock to rise again, if the market fails to meet the expectations, quick thinking is needed in order to avoid higher losses. A very small percentage of those who consider themselves day traders ever actually see a profit.
The US Securities and Exchange Commission (SEC) advises against day trading due to the fact that most individuals do not have the wealth or ability to not only make money, but to also survive the losses that most traders will face. Day Trading is not the same as investing, an inexperienced person may look at the processes and feel that it is just short term Investing, but that is an incorrect view and is a leading cause of failure in day trading. Despite the promises of quick and “easy” money, day trading is a very stressful job. It requires dedication and doesn’t allow for a moments rest when trading. In this field a few seconds can make all the difference. Borrowing money to buy stocks is not recommended. Persons truly interested in risky investment should do so under the guidance and assistance of trained professionals. The risk should be spread out so as to minimize losses.
Mika Hamilton
http://www.articlesbase.com/finance-articles/day-trading-the-extreme-sport-of-investing-55199.html
April 23rd, 2010 at 1:29 pm
What is China doing that’s any different than what Tiger Woods is doing?
A powerful and dangerous force has been unleashed on the global economy. It’s a new source of skilled labor that has put American workers at a competitive disadvantage — and no one knows just how many jobs have already been lost because of it. The U.S. is running a huge trade deficit with this force; every year we’re spending millions more on what it produces than it spends on American goods and services. And to top it all off, this entity has built a massive currency reserve, investing large sums of it on U.S. government securities and thus enabling America’s fiscal profligacy.
Why, oh why, won’t the U.S. government do something to protect us from . . . Tiger Woods?
You thought I was talking about China, and I was. But I’m also talking about the modern-day golf legend. You see, China and Tiger Woods are a lot alike.
In seven out of the ten years since Woods burst onto the golf scene he’s been the top money-earner on the PGA Tour. He has forced his best competitors into second place while pushing countless players at the bottom of the heap out of the pro game entirely. He also has nudged athletes of all stripes from the lucrative endorsements market. He’s the best-paid corporate mascot ever, lending his name and likeness to General Motors, General Mills, American Express, Accenture, Nike, and more.
Such success both on an off the course has paid very well. Woods can’t possibly spend all the money he makes. (He took in $100 million from his Nike deal alone.) And what he doesn’t spend he either saves or invests, no doubt putting ample resources into U.S. government securities.
So what is Tiger Woods doing that’s any different than what China is doing?
Both are competing successfully. Both are earning more than they are spending. And both are saving and investing their wealth. If you think of Tiger Woods as his own country, he and China are just the same. Yet not a day goes by that we don’t read of some new political effort to throttle competition from China for the sake of the American worker and the American economy. Where are the initiatives aimed at protecting us from Tiger Woods? Think about that the next time a politician proposes protectionist legislation aimed at China.
Of course, pro golfers aren’t whining about being beaten by Woods. Rather, they know they must improve their games — or at the extreme, find new games to play. Competition is the lifeblood of sports, and the professionals accept this premise. At the same time, the consumers of sports — the rest of us who watch it on TV — insist on it: If there were no competition, sports wouldn’t be very interesting.
So why are American manufacturers whining about being beaten by China? And why do our politicians support these false notes?
Competition is the essence of business just as it’s the foundation of sports. That’s why we have antitrust laws; they’re an attempt to keep competition alive and well. And just as in sports, competition is good for consumers. It forces businesses to improve their products and keep prices low.
Yet there are people who understand all this in principle and still make an exception when it comes to competition from foreign nations. Why? There’s no fundamental difference between competing with someone across town or someone across the globe. Why the different set of rules for China and Tiger Woods, or for foreign and domestic competition?
One of the usual arguments against foreign competitors is that they are “unfair”; that they expect us to buy from them, but they won’t buy from us. China, it is said, is cheating us by building up an enormous “trade surplus,” which now totals over $1 trillion.
But Tiger Woods doesn’t buy as much from America as America buys from Tiger Woods. In fact, Woods is no different than anyone who has ever succeeded enough in life to accumulate savings. China does just that and it’s a problem. But it’s no problem when Woods does it, or for that matter when you and I do it. We often hear that the “trade deficit” with China means that America has gone into debt to buy Chinese goods. But that’s no more true than saying we’ve gone into debt in order to watch Tiger Woods play golf.
Some of the goods we import from China are paid for with exports. In fact, U.S. exports right now are running at record levels. For the rest of the goods we import from China, we pay money. But that’s money we have earned, fair and square. Just because China sold more to us than it bought from us doesn’t mean there’s any debt involved.
Say you bought a pair of Nike’s because you thought that ad with Tiger Woods in it was so cool. Did you pay for your sneakers with money, or did you export something to Nike? Last I checked this isn’t a barter economy, so you probably paid money. But that doesn’t mean you went into debt for those sneakers.
The China-bashers also say that China’s investments in U.S. government securities are “unsustainable,” and they worry about what will happen to U.S. interest rates if those investments are liquidated. Well, suppose China took that money and started buying U.S. goods with it, instead of saving it. That means U.S. producers would have a lot of very profitable work to do. And that money wouldn’t disappear. It would simply change hands, and its new holders would ultimately have to invest it.
Perhaps China worries so many, and Tiger Woods doesn’t, because he’s an American and China is, well, China. But try this thought experiment: If Woods weren’t an American, would you feel differently toward him? Would you want to slap a targeted tax or other penalty on him? Or would you restrict Americans from doing business with him? Your answer is likely “no” to each of these. You love watching him play golf. And even his competitors know that if he wins and they lose, that he has raised the level of the game and made it a better business for everyone involved.
So why do so many endorse protectionist laws against China? Don’t these very same people love buying cheap toasters at Wal-Mart — toasters made in China? And don’t the American firms which cannot compete with China understand that the ascent of this new economic force has lifted the entire global economy, ultimately making it a better game for everyone?
When you think it through there’s only one sensible approach to trade with China: Go get ’em, Tiger!
April 23rd, 2010 at 6:31 pm
I’m not reading all of that because I couldn’t be bothered.
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April 23rd, 2010 at 6:33 pm
What
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April 23rd, 2010 at 6:35 pm
Surly you didn’t write all that to say you like the free trade and free enterprise system?
Build a better mouse trap and they flock to your door.?
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April 23rd, 2010 at 6:37 pm
the one thing you don’t touch on… China artificially keeps it’s currency low… because it’s a communist government…
that would be like Tiger Woods taking 5 shots off his score every time he stepped onto the green… if you know much about trade and econmics
in fact, the U.S. has had several "unfair trade" lawsuits against China due to this… how many lawsuits has tiger had against him for cheating?
that was a lot of talk, all the while… not saying a whole lot… impressive… good job on talking about things you don’t seem to know much about…
oh and the PGA has many regulations on the golfers to make sure they are all on the same level… not so much with U.S./China trade…
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April 23rd, 2010 at 6:39 pm
wow, that’s a bit much, ummm. I lived in China and consider my home to be the world. If you think being a golf legend is where its at, then you should play golf.
You cannot fight the changing tides, either adapt or get out of the way. You should not kick your competition while he tries to make his put. That’s obviously a red flag.
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April 23rd, 2010 at 6:41 pm
You really don’t know how to choose a good analogy.
Tiger Woods is a pro athlete who’s income is derived mainly from his endorsements from corporate sponsors. He is still taxed. He still obeys the laws. His currency is invested most likely, but invested in the general economy of which government securities are only one part.
Tiger Woods does not produce goods (other than entertainment). Tiger Woods is not in direct competiton with American manufacturers. Tiger Woods does not have his own currency, laws, or authoritarian government.
Also, Tiger Wood’s income is a fart in the wind compared to the economies of the US an China.
In other words, you’re comparing a golfing pro to a country. You might as well compare a baby to rock.
The reason why people are up in arms over China is that China isn’t playing fair.
Put simply, the global market works well IF the playing field is fairly level. This includes money markets (currencies) and trade regulations.
China keeps a death grip on it’s currency instead of floating it on the market. This keeps the currency at an artificial level, allowing for imbalanced trade in both goods and labor, not to mention lax labor laws.
If China isn’t going to play fair, then neither will the US.
To shoe-horn this into your analogy, Tiger Woods is cheating and the USPGA isn’t really stopping him from cheating. Do his competitors let him keep cheating, or take steps to stop him from cheating.
Nobody likes a cheater.
~X~
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