Day Trading Myths Exposed
You've seen the courses on the Internet and heard discussion about day trading
, which has led to many day trading myths. Because it's not a mainstream occupation, many erroneous ideas have emerged.Here are ten myths that surround day trading and truthful responses.
1. I'll be buying IPOs before anyone else. The reality of the situation is that buying IPOs is tricky and not always possible. The price often rises quickly before the average trader can get their limit order filled.
2. I'm using direct access trading; I'll get filled instantly. You must conduct direct access trading in order to be successful at day trading, but that doesn't mean your order will be filled when you click the mouse. You'll need to become accustomed to placing limit orders and have your stop loss order in place. In reality, the flow of orders varies and you must be willing to deal with it by gaining the proper experience.
3. Because I'm day trading, I'll be able to buy and sell around the clock. That's a myth, because you can only conduct online trading business when the market is open. In reality, you can place an order any time, but it won't be executed until the market re-opens. And you may experience trade delays, since you'll be queued up with everyone else.
4. I'll make a killing overnight. The "get rich quick" myth has been around for a long time and isn't likely to go away. In reality, day trading can be stressful and risky for those who don't have the education and acquire the training that's needed to succeed.
5. I keep hearing stock market experts say that day trading is too risky. That's one of the most common day trading myths and it is valid for anyone unwilling to treat it like a business. Learning to use limit orders and stop loss orders are imperative.
6. My brother-in-law says day trading is gambling. Betting on a football game or a horse race is gambling. Short-term trading is based on facts and the degree of risk is determined by your level of preparedness. In reality, proper training can overcome many problems.
7. I'll be stuck in front of a computer screen all day. It's a myth that such involvement is required. By setting a personal limit on time allotted to day trading, you'll be able to get what you need done in two to four hours each day. You have freedom to live your life.
8. You need a huge account to be a day trader. You need at least $25,000 of trading capital or you'll be limited on the number of trades that you can conduct. Those will less money will be limited to three round-trip transactions (in and out on the same day) within a five-day trading period. Exceed that limit and your account will be locked by your brokerage firm. Those who meet the requirements (see the SEC comments) are free to trade and join the flow of orders.
9. Day trading is stressful. Things move quickly when you day trade, so it's no myth that you must have the constitution to handle those sort of ups and downs. Ask the experts, who have the online trading experience and they'll admit it can be stressful. The other reality you must avoid is the habit of worrying about the losing trades and the trade delays, which makes the situation more stressful.
10. I'm going to quit my job and become a full-time day trader. Not a good idea. While it is possible for those with education and experience to make money, don't fall for the "get rich quick" myth. It's very easy to lose everything. Don't quit your day job before you can afford to do so.
by: Matt kaldor Business Planning Templates: Getting Started Los Alamitos results oriented strategies A Range Trading Strategy That Makes Breakout Part Of It Best FarmVille Strategies © FarmVille Secrets, Strategies and Tips © Best Mafia Wars Strategies © Mafia Wars Secrets, Strategies and Tips © Discover How to Strategically Eat to Lose Belly Fat Discover 3 Powerful Eating Strategies Found in Diets to Lose Stomach Fat A Lesson In Leverage Contract Phones With Free Gifts Great Mobile Phone Offer Driver Robot Key Rapidshare Magic Of Making Up Rapidshare