In the current climate of extreme financial austerity and vicious cutbacks, people are naturally looking for ways of supplementing their earnings. It is difficult enough for those who relied on on over time that no longer exists, but it is even more difficult on those who have lost their jobs. There are two main routes that people are trying to investigate.
A few traders took a big risk and invested in tech stocks and ended up making a killing!
These are: setting up an off line business within their own field of expertise and trying to create money on the line. Within the ‘making money on line’ route, there are three main possibilities that people are turning to affiliate marketing; the stock exchange and Forex (foreign exchange markets).
In this piece, I would like to take a closer look at trading stocks and shares on line and in particular, day trading, which is the buying and selling of stocks and shares within a twenty-four hour period or even within the same trading session. Some traders extend the period to mean a week, but to me ‘day trading’ represents a day.
Trading stocks and shares, let’s just call it trading shares from now on, can be a profitable way of making money, but as everyone knows, there is not actually any such thing as ‘easy money’. It is not the trading per se that is a problem – far from it, brokers have made it very easy for people to trade online.
Input ‘trading shares’ into Google and you will get inundated with opportunities for trading on line at a few clicks of a mouse. There is little to choose between the brokers, so it is best if you can decide on one that operates in your country so that you understand the laws regulating it unless you would like to trade in the shares of a country not normally covered by brokers in your country.
Once you have chosen your broker and put money into your account the excitement, and the risk, begins. The risk of losing your money, that is.
You see, when just rich individuals traded shares, they normally paid a stock broker to do it for them. There still are such institutions – many of them, going under different names, like mutual funds and investment trusts and there are also stock brokers who have a select clientele, but we are not talking about those.
The majority of day trading is done either by top traders or by working class individuals. The professionals mostly work for huge companies like pension funds and the like with masses of information, whereas the majority of individuals who engage in day trading do so at their computers at home
Under normal conditions, individuals or companies, buy shares because they think that they can see a long term upturn in that firm’s or that sectors future. This takes knowledge – not insider-knowledge, but a deep understanding of what is going on in that company or that market. This is subject to error, naturally, but if you are in for the medium term, say a year or more, things could change in your favor, if you have the time span a little wrong.
If you are day trading, you do not have the luxury of time.
As a child, I once bought 50 1946 English farthings, because a coin dealer told me that he would pay a pound each for them, if |only he could find some. I knew someone who had a hundred at forty pence. I day traded and made some money.
The purpose of the story is, how do you get that knowledge? Well, it is not simple. It takes dedication. It takes research and it takes work otherwise it is merely gambling and most gamblers lose.
Day trading is the hardest form of trading in shares and no real trader would recommend it to anyone. However, it can produce instant profits and of course, it can tie your money up if you have taken a wrong decision and have to wait for the right time to sell.
Day trading is very risky and not for the faint of heart.