Day Trader

by Investing School on September 14, 2009

A day trader is someone who devotes his whole day to the buying and selling of stocks, currencies, etc. These individuals are confident that they can make substantial profits trading every day. Usually they buy several or numerous stocks and sell them before the daily markets close.

Because of the number of transactions entered into, the commissions and other accumulations inherent in juggling such a load are enormous. Therefore, day traders must be careful in selecting an appropriate stock broker that offers the best compromise of execution speed, tools and trading commissions.

The computer has simplified things and is a convenient tool, especially to investors, brokers, etc. But some people are owned by their computers and only feel vital inside this cyber world. A computer can be either a blessing or a curse for a day trader, often times determined by the profit and losses.

An investor who devotes all his time to the trading of stocks views this undertaking as his career and usually takes pride in that fact.

Traders adhere to certain strategies and pursue any number of trading systems that they feel will lead to success.

Traders can be retail traders or institutional traders. Institutional day traders work for companies or corporate entities with substantial capital, software and advisers at their fingertips. Retail day traders usually are individuals that trade for themselves or a group of individuals. The amount of funds from other individuals being managed by a retail trader is regulated by law.

Laws in the United States limit a day trader from promoting themselves as fund managers or professional investment advisers to prevent fraud. Therefore, a day trader that wants to manage other people’s funds and charge a fee must be registered to become an financial adviser and be regulated.

On the flip side, if you are letting someone manage your funds, don’t allow just any day trader to take your money and invest because there are tremendous risk involved in day trading. While there are numerous stories about overnight successes, there are also many more horror stories where day traders lost their fortune.

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