Posted on August - 18 - 2010
Day Trading 101: What Every Rookie Should Know
Day trading can be very profitable if you know what you are doing. If you are interested in starting a career in day trading, here are things that might be useful to know. What is a day trader? A day trader is someone who buys and sells financial instruments within the same trading day. Here are common examples of financial instruments that day traders deal with: • Stocks. These are shares in the ownership of a particular company.
• Futures. These contracts allow a buyer to purchase a certain thing for a certain price at a certain time in the future.
• Derivatives. These are contracts, which have their values derived from the price of other variables like stocks, bonds, money market instruments, and other cash market investments.
• Options. An option is binding contract that gives the buyer the right (although not the obligation) to purchase or sell an asset at a specific price on or before a specific date.
•Currencies. Euro, yen
Day trading means buying and selling stocks and other financial instruments on any given day. All the transactions are carried out before the market closes at the end of a trading day. If you participate in day trading, then you are known as a day trader. Future contracts like commodity futures, interest rate futures, equity index features, besides currencies and stock options are included in financial instruments. In the past, day trading was exclusively used by speculators, professional investors and financial firm, but today due to the growth of electronic trading, common people have started day trading sitting at home. But if you want to jump into forex day trading, then you need to know the day trading strategies so that you don’t suffer losses, as there are several day trading risks associated with it. There are several day trading reviews, which you can go through to gain a better understanding of it.