There are some very important things that you need to bear in mind if you’re thinking about day trading online. Day trading can be extremely lucrative, for the experienced and well equipped individual. But if you’re just starting out then you need to be aware of how the system works and what drives the wall street machine.
Here are some quick guidelines, and very important things to keep in mind before trading online, especially if you want to do day trading.
In the short run the stock market is very volatile, often irrational, and appears flawed and skewed. This can be a good thing however, because most day traders exploit these inefficiencies for quick profit. It is important to note that Wall Street earns its profits at the expense of the public, and often times at the expense of inexperienced traders. The typical day trader however earns his or her profit at the expense of Wall Street, by learning the game, and beating them at it. Trading In Stock market Needless to say the Wall Street machine does not look too kindly on day traders, because the average day trader siphon money from the huge Wall Street machine.
The stock market trading industry is flawed and skewed in the same way the Casino is. In both cases the odds are always with the house and if you play long enough the house will ultimately win. The house in this case is Wall Street conglomerates who control billions of dollars in trading of stock each day. In stock trading the odds are always with the house because of a system called bid-ask spread. Because of the system that is the bid ask spread, it is a constant challenge to the day trader to earn a consistent profit by betting against the house which is the Wall Street banker’s.
As a day trader we have to identify when the odds are in our favor, and the odds are usually in our favor when the trade is in the house favor. So in a sense we always try to be on the same side of the trade as the Wall Street firms. In trading this is usually known as exploiting the bid ask spread, and it is the way most day traders earn their profits each day.
Unlike gambling in Vegas, the New York Stock Exchange rules will allow an individual trader to place a bet with the house. This advantage will give the day trader the same opportunity and access to profits that the huge Wall Street machine has. So we bet along with the house by buying on the bid and selling on the ask. Most people who trade online are not usually aware that the use rules even exist. The general public’s ignorance of this very critical rule is usually the way the day traders profit. By exploiting these rules that is the bid ask spread, day traders are able to make low risk profits here and they are and even on stocks that have no movement.
If you think about it this is quite good for the day trader, because the day trader can look for stocks that are less volatile, and are more stable, and still profit from these stocks. You want to look for stocks like closed ended funds, utilities, and real estate investment trusts, although real estate tends to be a bit more volatile these days.