Day Trading

Perhaps you are considering Day Trading as a full time activity. Maybe you’ve recently cashed up and you are thinking of generating some income to supplement your pension and have always been interested in the Financial Markets. Let’s face it, its one of the most exciting games you can play but on the same hand it is also one of the most dangerous, if you don’t possess the Psychology of a Successful Day Trader. Before you take this decision, analyze your character and be honest with yourself. This game is not for the faint hearted.

CFDS and Other Derivatives

CFDS (Contracts For Difference) and other financial derivatives are now a multi billion dollar business as a result of the advances in online technology that has made real-time trading data available on tap. Accounts can be opened within minutes from the comfort of your home and before you know it, you can be challenging others like a gladiator in the amphitheatre of global financial markets.

Many of the trading platforms today are state of the art trading screens with tick by tick live quote screens, charting and news facilities. Liquidity is extremely high and money can be transferred at lighting in and out of transactions and bank accounts. Some of the bigger providers such as IG Markets are stock market listed companies themselves and are regulated by the Markets of the country in which they operate.

The attraction of this type of instrument is that it enables you to take up a large position in the market with a small margin payment. For example a $1000 Margin Payment may see you with the equivalent of $100,000 in the market. A 1% movement in that instrument will either see you lose the whole of the $1000 or a see $1000 gain. This is leveraged trading, unlike traditional stock market investing where you would have to invest all of the $100,000 to make or lose the $1000 with a 1% shift in prices. This is why many people are attracted to this form of trading.

Can you Master the Psychology?

Psychology is the Key to Success as a Day Trader. This attribute is the most important of all. You can be the best analyzer of stocks and have the most fantastic state of the art tools and apply all the sophisticated indicators in the world, but if you can’t master your psychology then you won’t be in this game for very long.

How will you react to these scenarios?

You’ve just opened a position and it’s going against you. The market closes in one hour. Will you close it or wait until tomorrow? How will you sleep tonight?

The trade has nearly stopped out, are you going to add to your position or leave it stop out?

You open your trade and soon you are up 50%. Are you going to close and take your profits, or are you going to sit tight and get some more?

After three weeks you are down 10% of the capital you started with. How do you feel about placing trades now? Are you tempted to place more in the hope of recovering losses?

These are some of the questions you will be faced with, as you try to master the Psychology of a Successful Day Trader. Like other business ventures you will have to Research Before Starting

Richard Hurford

Aspiring Internet Affiliate Marketer