Article: What Does It Take To Be A Day Trader?

Discussion in 'Stock Market Education' started by longtermbull, Jan 31, 2017.

  1. longtermbull

    longtermbull Administrator Staff Member

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    Since the 2008 US mortgage crisis, which resulted in a worldwide recession, markets have been extremely volatile and day traders have been making hay while the sun shines. We hear more and more about day traders and very often they are cast in very detrimental terms. Many people see them as opportunist, speculators and a pest for traditional long-term investors but they are a vital element of the market. Whether “traditional” investors like it or not it is very often the short term day traders who inject liquidity into the marketplace allowing others to trade more freely. So, what does it take to be a day trader?

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  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I'm pretty active in my trading account, but I rarely buy and sell the same stock in the same day. And I never, ever liquidate anywhere near my entire account the way a true "day trader" (in the strictest definition of the term) does every day.

    I have found it more profitable, less risky, and less costly to hold most positions overnight at the very least - and usually days, weeks, or longer. And I often add to or subtract from positions - I don't sell out of a position entirely as often as I only sell out partially.

    And I am much more likely to buy on a large selloff and sell on a large run up than do the opposite.
     
  3. longtermbull

    longtermbull Administrator Staff Member

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    Do you have a target return/price in mind for each stock you buy?
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I like to try to be in a position to take at least some profits if a stock shoots up double digits or more overnight or during the course of a single day.

    And that position to take some off the table generally means that I'm up at least double digits on that position from my cost basis.

    If / when I'm fortunate enough to find myself up triple digits on a position, it's time to take most of it off the table. At least half, perhaps 80-90% of it.

    The URI position I took just over a year ago is a good example - I bought 110 shares @ just over $45 on a double digit dip on an earnings report.

    6 months later, it had shot up nearly 75% after a couple of better earnings reports - so I sold 100 of those 110 shares @ ~ $78 and change when it jumped up double digits.

    I bought another 10 shares in early Nov @ $70 and change when it took another double digit dip on earnings news. I sold half of my then-20 share position a week later when it shot up near $90...

    I'm down to 10 shares that I'm holding with a nice unrealized profit margin currently around 80%.

    Of course in hindsight it's easy to say that I would have been better off holding all 110 shares that would now be trading in the $125-130 range, but hindsight is always 20/20.
     
  5. longtermbull

    longtermbull Administrator Staff Member

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    The key is to hedge your bets - it is never wrong to take a profit.

    I am holding 100k in a UK smaller company at an average price of 84p against current price of 58p. I think the company will still come good but wish I had sold for a smallish profit in the 90s as my cash has been tied up for nearly a year now.
     
  6. kirtimeliwal

    kirtimeliwal Member

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    Day trading needs a high level of market knowledge. It involves risk also, only a professional trader who very well aware about the market.Day trading means buying a stock and sell them on the same day before market get closed.
     
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