Some jobs possess a certain allure because of the promise of high income, perks and prestige. A position as a stock trader is one of those jobs. Wearing corporate power suits while trading stocks with the boys and making enough money to summer in the Hamptons is a beautiful dream but not attainable for everyone. For those who live nowhere close to Wall Street or who lack a power suit, day trading might offer the next best thing as they buy and sell stocks in the comfort of their own home or in a small office with other day traders.
Day Trading Defined
Purchasing a couple of shares of company stock doesn't make you a trader, nor does opening up an account to buy stocks with an online brokerage company. True day traders spend their days analyzing the movement of all stocks, looking for the stocks that show volatility. They then purchase multiple shares of the stock and ride the wave of momentum until they feel that it's reach its peak. Then they sell the stock -- at a higher price, they hope, to make a profit. Day traders don't hold on to stocks; they aren't traditional investors. In a way, they're gamblers, and the horses that they're betting on just happen to be running on a ticker tape around Wall Street.
No Break Times
A day trader stays on top of the action all the time. Many traders use multiple computer screens so that they can track the market on one screen while buying and selling on another. Even though day traders may work from home, they’re not out back gardening or trying to juggle laundry in between trades. The pace is too rapid for taking extended breaks. Traders deal in increments of change; so if a stock starts to move in any direction, they have to pounce on it quickly. The good thing is that when the market closes, a trader’s done for the day -- no late nights to contend with.
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Spending eight hours with eyes glued to the computer monitor can wreak havoc not just on your eyesight but your health as well. Day trading is a fast-paced, high adrenaline line of work. Although many people say that they thrive under pressure, the fact is that stress is not good for blood pressure and causes a host of other problems. Day trading is extremely stressful due to the large amounts of money traded at a rapid pace. Many newcomers to day trading often suffer large losses due to lack of education and understanding about what they're getting into.
Day traders make money by buying stocks on the margin. In plain English, this means that they borrow money to cover the stock purchase and then try to sell the stock at a higher price. That way, they can not only cover the amount borrowed but make a profit as well. This is pretty risky, because sometimes traders on the other side are trading on futures, hoping that the price will go down. Although purchasing a volatile stock may be a good plan because of heavy trading, it can get very risky, because holding onto the stock for one second too long could end up costing a trader thousands.
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