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Day Trading Stocks: Simple, But Not Easy The allure of day trading stocks is not difficult to understand. It’s a chance to make large amounts of cash fast. Of course, we all know it’s also a way to lose enormous sums of money fast. But, day trading is here to stay, it’s legal, and it has made more than a few people rich, while others, well, let’s just they learned some hard lessons. But, you still think you have the backbone to day trade. What do you need to get into day trading stocks? For example, do you need a license? The answer is no, you don’t need a license to buy and sell stocks on the same day. Many people confuse being a trader with being a broker. A broker needs a license, but he or she is not necessarily a trader. They are selling financial instruments to customers. So all you really need to get started is a computer with a fast and reliable Internet connection. You will also need a direct access brokerage and real time market data, both of which you can get through the Internet. What is a direct access brokerage? This is a service that lets you use their system so that you can gain access to all the markets at once. If you didn’t use a direct access broker you would have to get your own separate account with every exchange you wanted to trade on. A direct access broker makes it easier for you to play all the exchanges at once. There are many such services to choose from, and their fees and charges vary widely, so you’ll have to do some homework to find a broker you can afford. So you have your computer, Internet and brokerage service, what else do you need to get started day trading stocks? You’ll need a telephone, of course, and you’ll also need some trading software, which you will use to conduct your buying and selling. Some brand names of these are “Trader Workstation,” “Bracket Trader” and “Visual Station.” There are others as well. Again, you’ll have to investigate to see which one is right for you. You should also get software for charting. What’s that? It’s a way to represent the prices of stocks in chart form. This makes it easy to analyze the ebb and flow of a stock’s price, and provides other forms of analysis very easily. One of the final elements for a basic start in day trading is access to market data. One source is Interactive Broker’s data. This you will get over the Internet as well. The fact is, day trading stocks is not a difficult concept to grasp, and you don’t need an advanced degree in economics to be good at it. In fact, it’s really quite simple. What it basically gets down to is “buy low and sell high” — and do it fast. For example, you may notice that Stock X opens trading at $49 per share in the morning. You decide to buy 100 shares for $4,900. Your hope is that in the next few hours, or sometime during the day, it will go up to, say $51 per share. When it hits that, you sell. You made a $2 profit per share, so on a 100 shares, you made a fast and easy $200. Of course, the price could drop as well, meaning you would have to take your losses, or try to stay in the market until the price comes back later. But you can also “go short” or practice “short selling.” This is when you borrow a stock, hoping the price goes down. So if Stock X opens at $49 per share, you borrow 1,000 shares and then immediately sell them for $4,900. If the price drops to $47, you use the “$4,900 you received from selling your borrowed stock to buy the stocks at the $47 price, or $4,700. That means when you return the 1,000 shares you borrowed and sold at the higher prices leaves you with the difference, or $200 in this case. Yes, it sounds very easy and it can be. There’s only one problem: No one is a true psychic. Markets are extremely unpredictable. Day traders try to increase their odds of being on the winning side of a trade by studying the long term trends of the instruments they are trading, and so on. So the bottom line is, day trading stocks is exciting, potentially very profitable, but not for the feint of heart or the foolish. Above all…..here’s one of the better day trading tips you’ll get today — never day trade with more money than you can afford to lose. Tags: Simple, Stocks, Trading View this post on my blog: http://stocktips.valuegov.com/day-trading-stocks-simple-but-not-easy/