By now you must surely have heard of day stock trading. Ever since the advent of the Internet this type of trading, mostly done online now, has live through an unheard of surge in popularity. What exactly does it entail? Why are so many people doing it? Is it really possible to make a living doing it?
Day trading is a specific form of buying and selling stocks in the hope of realizing a profit. A day trader buys stocks with the hope of selling them at a profit during the same day ' sometimes within a couple of hours. He would never shut down his computer at the end of the day with any stocks in his portfolio.
Why has it become so popular? The true answer can most likely be found in the fact that it gives you an incredible rush of adrenalin to watch stock prices go up and down on real-time charts, to open a trade and make more money within a few hours than most people make during a month.
The questions has to arise: why are not more traders successful? How it is possible that they all trade the same stocks, yet some are making money and others are consistently losing money? The answer lies in the character of the individual trader.
If your personality is of such a nature that you find it hard to live with loss, you will struggle to become a successful trader unless you learn to counter that weakness. The single most common reason for traders to lose money is because they find it impossible to let go of emotion and greed.
Luckily there are ways to counter your own inherent weaknesses. You have to learn to be disciplined. You have to learn to follow a set of rules under all circumstances. Once you have reached that point, you will be on your way to become a profitable trader.
A trading system is the answer to the woes of a trader who finds himself unable to trade profitably. This is simply a set of rules, drawn up by yourself, that governs your trading activities. When you must cash in on profits and also stipulate the maximum amount you should risk on a single trade.
Your trading system does not have to be perfect from day one. You can fine-tune it over time. The important thing is that you should have one and that you should follow it to the letter. This is the only way to make sure you will not cling to a losing trade and wipe out your whole trading account.
If you talk to an experience trader he will no doubt agree that the difficult part of trading is not when to enter a trade but when to exit it. That is why you're trading system should clearly set out what you have to do when the stock goes up and then falls back again or vice a versa. Without a trading system it's virtually impossible to be successful in day trading.