Before you quit your day job to take up day trading, test your response to each of the following:
- Quarterly earnings or sales are up more than 25 percent. Do you buy more or sell and take the profit?
- Company XYZ is trading below net cash at $7 per share; according to conventional wisdom do you buy?
- Market indexes are in a downtrend - is it a good buying opportunity or time to sell?
Day trading stocks online
Herd mentality, the madness of crowds or pure genius... say what you will but day trading stocks online can build or break fortunes for those able to handle the challenge and inherent risk.
Not for the faint-hearted, day trading isn't solely comprised of the fool-hardy novices depicted in the media. Many who specialize in this area have exceptional timing, understanding of the psychology of investing and equally impressive technical savvy to draw upon for their decision-making.
Day trading is a skill that requires discipline, hard work and a lot of practice to master (a little luck never hurt either). Think you have what it takes to make a living day trading stocks online?
How many of these can you define?
- Adam & Eve Tops
- Hell's Triangle
- Hindenberg Omens
- Bollinger Bands
If they sound more like twisted movie titles than trading terms then don't quit your day job just yet. Instead, try your hand at virtual day trading. With real cash prizes it might be the best investment you make this year!
Learn more about Technical Analysis for Day Trading
Day trading system
Do you have a day trading system? Do day trading systems actually work? Many investors swear by them and present enticing examples to support the use of a day trading system but for every advocate there is an equally vocal critic charging day trading systems simply cannot forecast the complexities of a market involving human nature. So, who is right?
In many respects they both are correct. The market represents known variables as well as unknown variables. The known variables (price, exchange rate, economy etc...) are those things that can be tracked, measured and eventually systematized while the unknown variables (human behavior) is far less subject to quantifications.
Don't believe all the hype you hear on late night infomercials; instead, take your time to try out various systems to understand how they work. Whether you adopt one or more for use in your own investing the knowledge gained from understanding what others are doing will be a distinct advantage in your understanding of market psychology. Use these criteria to evaluate any supposed day trading systems before spending - or risking - your hard earned money:
- A good day trading systems is one that enhances your ability to make decisions - not removes you from the decision-making process.
- It provides forecasting probabilities not simply historical precedents.
- Forecasting is probabilistic - there are never any guarantees.
- It is not based on "hot tips" or other questionable methods.
Not sure which day trading system is right for you? Try out a variety of different ones with your own virtual stock portfolio at wallstreetsurvivor.com.