The Thrills and Dangers of Day Trading

Many people have seen images of day traders with their multitude of computer screens showing real-time charts and quotes, trading the ups and downs of the markets. It all looks very exciting, doesn't it? The thrill of becoming rich in a short amount of time is appealing to nearly everyone.
Reality Before you quit your day job, consider the realities of day trading. It often requires a lot of money to begin with, and borrowing money to trade with is generally a bad idea. It can require hours and hours of staring at computer screens, with little time for lunch or restroom breaks. This can lead to physical and mental exhaustion and poor decision making. It can also be very risky, especially when investing large sums of money. Since most stock prices only fluctuate one or two percent every day, you need to put a lot of money into it in order to make a decent profit. The biggest danger here is a sudden price fluctuation in the wrong direction, causing a massive loss that wipes out all of your gains from the past few days or even weeks. Compounding this problem is that your diminished trading capital will lead to smaller profits in the future, possibly leading to desperate measures such as taking bigger risks to get back on track. All of these factors add up to a potentially stressful situation!
Don't Give Up If you have a strong desire to make a living or a partial living off of day trading, then don't be discouraged by this article. Instead, take the precautions necessary, begin practicing, and work on the discipline needed to succeed in the long run. There are thousands of successful day traders around the world. It might be wise to have another source of income in case your trading isn't so successful every day. That would help sustain you and reduce your daily stress.
Don't Bet the Farm Every once in a while you may find a "sure thing" in the market. You may be tempted to "bet the farm" on this perfect trade. More often than not, these kinds of trades do not work out. If you bet more than you should have, it can literally ruin your life. Imagine getting a bank loan of $100,000 for trading and using your house as collateral. You put it all in one trade and then lose fifty percent of it in less than one day. You have instantly lost $50,000 and the bank may want to sell your house in order to get their money back. It can take years or decades to pay back losses like that. It is much safer to trade with money you can afford to lose.
A Good Book There is a good book out there called, "How I Trade for a Living," by Gary Smith. The author takes time to do his homework each and every day. He watches the financial television shows at nearly every waking hour, reads newspapers and magazines about the global economy, and always pays attention to overseas markets. He uses diligence and discipline to get a good handle on what the local markets are going to do the rest of the day. The result? He makes a sizeable, consistent profit every month with only one bad month in years of trading.