суббота, 12 июня 2010 г.

Pros and cons

Day traders' objective is to make profits by taking advantage of small price movements in highly liquid stocks or indexes as well.

A day trader who wants to achieve success needs appropriate knowledge, equipment, tools and markets together with the ability to trade the right trading systems. A day trader with the right information will be able to succeed, otherwise, success will go to the other person in the transaction or to the broker, if he happens to be the best informed person in the transaction.

Besides all these technical requirements some personal traits are also necessary. They include the right psychological and emotional traits. Two emotions that the day trader faces and should manage arefear and greed. A balance between these two emotions is necessary to achieve successful trades. [2]

Also, a successful day trader needs to know which stocks to trade, when to enter the trade, and when to get out of the trade. Part of this knowledge is to find those stocks with liquidity and volatility, in order to generate profits. [3]

Day trading,as part of the market timing, however, is an activity that academics do not support. They question the market timing and believe in the efficient market theory. However, market timing is not illegal and it is not considered unethical. And, basically, the activity was questioned because mutual fund companies had established in their prospectuses that short-term trading was forbidden, and still some clients were allowed to do it.

Although the activity can be profitable, it requires effort to be put on and is a difficult skill to master. Many people expect to make large profits with little effort, and the fact is that around 80% of day traders lose money. [4]

Комментариев нет:

Отправить комментарий