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The stock market is a volatile beast. You
can be up thousands one day, and down
thousands the next. It is a stressful
industry, it is not for the faint of heart,
but for those who succeed, it is the best
industry in the world. A day trader is
someone who buys and sells stocks, options,
futures and more in a single trading day, so
that all positions will be closed before the
market close of that particular trading day.
The amount of trading that an individual can
do ranges from a few stocks a day, to
hundreds of orders a day.
The Concept
This is a full time job that takes a great
deal of time for the individual interested
in day trading. In terms of day trading and
being a day trader, there are two types;
institutional day trader and individual day
trader.
An institutional day trader is someone who
works for a large financial institution, has
a lot of resources, tools and equipment to
be successful in the industry, while an
individual day trader works for themselves,
often alone. They use their own capital,
from loans in some cases, to use on the
stock market in day trading activities.
However, there are laws that restrict how
much of other people’s money a day trader
can manage. As well, in the United States,
day traders cannot advertise themselves as
advisors or financial managers. Typically,
most day traders will use direct access
brokers because they are fast and allow
direct access to exchanges and trading
platforms. The individual day trading boom
hit in the mid-1990s with the advent of
personal computers and the internet offering
fast, online trading at low costs.
Startup Costs
Startup costs for this can be a lot, or very
little. Depending on how much an individual
wants to get into the market, they can use
only a bit of money to start small and
hopefully build from that, or they can use
big money from loans and others to hit
things off big time on the market.
It is important to remember that lower funds
at the start give lower risk of losing
everything, while higher capital gives
higher risks but higher rewards initially.
Typically, you will want to have at least a
few thousand dollars to get into your day
trading career. Anything less will yield
rewards that are simply too small, anything
too big will yield greater loss risks.
How to Market It
There really is no marketing to being a day
trader. If you are going to be part of an
institution, then you simply need to have
the experience to get hired and that will
come from economics classes at a university.
However, if you want to be an individual
trader, you can do so simply from your home
computer, using nothing but a credit card.
You won’t be looking for clients in this
case, but simply using your own money, or
that of a lender’s, to gain the capital you
need initially.
