Day Trading

In: Business and Management

Submitted By weiszerik
Words 430
Pages 2
INTRODUCTION

Day trading is defined by the Securities and Exchange Commission (SEC) as “to buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits.” This promise of “quick profits” accompanying a new rule that gave priority to trades of less than 1,000 shares (Small Orders Executions Systems) which “leveled the playing” for small investors and the ease that websites gives people to short-term borrowing of capital to allow people to make big trades with little money has left to the growth of day traders around the world. Day traders tend to ignore the other part of the SEC definition, which seemed to be added as a caveat to the promise of wealth. It reads that “day trading is extremely risky and can result in substantial financial losses in a very short period of time.” Still with the levity of the SEC’s warning and many studies sighting that most day traders end up losing money in the long term, some trading websites have seen a growth of 50% from year to year of active accounts on their sites. The question should be asked then with day trading is “why with the inherent risks that most if not all day traders fall into, why someone would continue the practice of day trading?”
EXTRA INFORMATION I FOUND.
{This borrowing of funds (leveraging) has even became the marketing ploy for CMC, the biggest market maker in Canada, to entice people to use their site. CMC lets people know that an account valued at 10,000 dollars can make investments of 100,000 dollars giving clients a chance to make 4,000 dollars at the end of a trading day, but if the market goes south could leave an investor thousands in the hole. Even with this upfront risk posted on CMC website and studies showing that most day traders will lose money in the…...

Similar Documents

Trading

...Short Introduction to Trading Theory (S.A.Bartlett) Markets possess both complex dynamic and quantum system qualities. Complex as current dynamics are fully determined by current conditions, with every resulting action or cause producing a reaction or effect, forming the base of subsequent future actions. Quantum as states of equilibrium and disequilibrium occurs between different price bands. With the inherit behaviour of dynamic systems highly sensitive to initial conditions, behaviour of price trends remain a deterministic non-periodic flow, with the perceived construction of trends a by-product of the intra and inter day assorted occurrences exhibiting force upon one another. As the occurrence of these deterministic non-periodic flows exhibit both the reflexivity and factual states of the market; reflexive in its self perpetuating/self defeating distribution, fractural in its display of similar dimensional structure, any qualitative trajectory remains highly dependant on the initial conditions. Given the complex dynamical structure of markets, where the initial conditions remain unstable, bifurcating in accordance with the proceeding reaction or effect, the production of long term (fortnightly, monthly quarterly etc) probability distributions remains highly inaccurate. However, as the use of the mathematical models measuring the structural stability, underlying dynamics and non-linear movement of the basin of attraction, the calculation of the probable......

Words: 593 - Pages: 3

Trading Secret

...101 Option Trading Secrets Also by Kenneth R. Trester The Complete Option Player The Option Player’s Advanced Guidebook Secrets to Stock Option Success 101 Option Trading Secrets K E N N E T H R. TRESTER Institute for Options Research, Inc. Lake Tahoe, Nevada Copyright © Kenneth R. Trester 2004 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the publisher. Printed in the United States. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers. We advise all readers that it should not be assumed that present or future recommendations will be profitable or equal the performance of previous recommendations. The reader should recognize that risk is involved in any option or security investment, and they should not assume that any formula, method, chart, theory or philosophy will result in profitable results or equal past performances.......

Words: 41743 - Pages: 167

Insider Trading

...Singapore law states that price sensitive information belongs to the company. However, the arguments made in “Property rights” push for the case that if this information does belong to the organization, then it is the organization’s right to allow its employees to use it for insider trading. Let us examine these arguments. Who does price-sensitive information belong to? The employees who create this price sensitive information are empowered by the finances and reputation of the firm. Without this, they can’t make decisions that create this information. For example, the CEO of a company can’t go on a joint venture with another company to create a new product if he doesn’t have the resources of the firm at his disposal. The employees may disagree and would otherwise disagree may argue that it was their skills and ability that allowed this price sensitive information to be created. Yet, an employment contract means that an employee allows and employer to is already a contract between the employer and the employee to allow the use theof an employee’s skills and abilities for the benefit of the company in exchange for remuneration. The employee is going to be already being rewarded for his work and claiming ownership of the information would otherwise thus be a breach of a contract. Thus, let us take the position that price sensitive information is created by and belongs to the company. The company has the right to do what it wills wants with the information. So it is firm......

Words: 1391 - Pages: 6

Trading

...Most people blame losing on bad luck, words of a sore loser, but even Sun Tzu, whom wrote the book around 2000 years ago, knew that the first step or rather the first chapter to success is planning. You’d think they’d learn! * * At this stage, a villain would only think of preparing a plan that might lead them to victory but a hero would prepare a plan that can handle multiple possibilities which can turn a potential bad situation in to a moderate acceptable loss. And that is why good always triumphs against evil. Like any well thought out system or machine we require the blue prints and then parts. A car, for instance is a modern day miracle and irreplaceable part of our daily lives, but every car has some key components that are required for it to function, namely: the mechanics, the container, speedometer and rev meter. In the trading industry we also classify essentials into 3 sections: hardware, software and services. * * Hardware: We can start with the organs of every car, the mechanics under the shell, in our case the computer. What makes a Bugatti any different from Maserati, except the price tag? Horsepower, the one thing that puts you ahead of the enemy when racing down Lynnwood road, your ability to push your machine further faster than anyone else. The only way to achieve this would be to build a computer that is capable of running multiple applications at the same time. So what do we look for in such a machine: * Well the brain to any......

Words: 2833 - Pages: 12

Trading

...unbeneficial. The reasons that WTO stated include: technology changes, protectionism, and import competition (Growth and jobs). Protectionism occurs when a country design regulations to protect “domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other restrictions or handicaps placed on the imports of foreign competitors” (Protectionism, 2015, para. 1). In reality some countries can adjust better than other countries because of the effectiveness in their policies. In addition, it is clear that the world seemingly operates more effectively via free trade and restricting free trade tends to create more problems. Then again, free trade can stimulate economic long-term growth by providing numerous trading opportunities to gain a comparative advantage, unlimited production possibilities, and improve efficiency (output of products) (McConnell, Brue, & Flynn, 2015). International trade can create jobs through exports; in fact, the Department of Commerce compiled a report showing that exporting goods play a critical role in relation to employment. Exports created jobs and increased the GDP (Gross Domestic Product) because it expanded the global market for businesses by providing opportunities (Massoudi, n. d.). Furthermore, the data shows that U.S. exports increased to nearly $1.7 trillion and created $165,000 jobs per export (Massoudi, n. d., para. 3). Free trade has a positive impact on the economic condition because of the......

Words: 360 - Pages: 2

Trading Game

...(as in A2 stage1) List each account you used (transaction, saving and trading) and describe associated costs including any special offers you are using. Provide brief explanation/justification of your choice of accounts (Does it minimise your transaction costs? Any other reasons?) Example: Green Bank easy transaction account: no transaction costs for money transfers $22 (AUD) fee per transaction for foreign exchange (buying or selling USD) 2. Initial portfolio allocation (as in A2 stage1) Describe your initial portfolio. Provide brief explanation (Did you put any money on the saving account? Why? Did you buy shares in just a few companies or a lot of companies? Why? Is there any reason you buy shares in a particular companies?) Please note that I am not looking for “right” or “wrong” answer – different types of justifications may be used. For example, shares could be of companies from different sectors to provide diversification or just chosen randomly and so on. If you have a masterplan on how to beat a market, please share it with me; if not – this is not a problem – just briefly describe any reasoning you used (including random choice, companies I heard about and such) Example: The initial portfolio allocation 1. Green Bank easy transaction account transaction costs 2. Pink Bank online true saver account transaction costs 169.56 0 66,600.00 0 3. Green Bank online share trading account Company ticker number of symbol......

Words: 1222 - Pages: 5

Trading

...Essay One In the paper The Dark Side of Trading, Dichev, Huang & Zhou (2014) investigate the effect of high trading volume on observed stock volatility controlling for fundamental information. Past literature almost unanimously states that high volumes of trading are always good as they are correlated with lower transactions costs, easier, faster and cheaper creation and adjustment of investment positions, lower cost of capital and higher prices. However one of the implications of the study is that increased trading also bring downsides that impact various market participants (investors, managers and regulators). The literature seems ignore the fact that a high volume of trading can also be destabilizing, as it injects a layer of trading-induced volatility over and above fundamental volatility. Practices like circuit-breakers employed by regulators to halt trading when prices fall dramatically sustain the fact that the market can sometimes go haywire for no particular reason related to fundamentals. Thus such policies are consistent with the view that trading can create its own volatility and it can get so out of hand that the best thing to do is to halt trading so everyone can cool off. The authors did three experiments, they used matched ETF and dual-class stocks as settings with substantial variation in trading but good natural controls for the underlying fundamental, and then they examined the aggregate time-series of U.S. stocks since 1926 and the cross-section of......

Words: 1194 - Pages: 5

Insider Trading

...Insider Trading at the Galleon Group The Galleon Group was one of the largest hedge fund management firms in the world, managing over $7 billion, before closing in October 2009. From greed to more greedy, and finally to destruction, this time the protagonist is Rajaratnam, he was accused of 14 securities fraud. Rajaratnam had a glorious history. He is 52 years old Sri Lanka-American, graduated from the Wharton School, he began his career in the field focusing on technology investment bank Needham & Co., An analyst from the start, 34-year-old became the president of this bank. In 1997, he started a technology stocks investment company, which was called Galleon Group in New York. In 2009, Rajaratnam's net worth to $ 1.3 billion by Forbes global rich list among the first 559. When Galleon was established in NY, Rajaratnam said: "This is Raj Rajaratnam, only the paranoid survived." Unfortunately, this time his "paranoid" gets too far. Rajaratnam's case is the largest in the history of Wall Street hedge fund insider trading case at that time, but also the first use of the Federal Investigation Agency monitor means to obtain evidence relating to insider trading. Rajaratnam's arrest on behalf of the US government efforts to combat financial crime has entered a new phase. In this case, there are two ethic issues that can be discussed. The first is a white-collar crime; insider trading is one of them. The second is the wiretap recording, whether it is legitimate, if it is,......

Words: 1451 - Pages: 6

Trading

...When it comes to FX trading, traders have two sets of currencies that come in a pair. The fluctuations in the exchange rate between these two currencies are where a trader looks to make profit on the Exchange Market. If trader believes that the foreign currency will appreciate against the USD, the trader’s profits will rise with every increase in the exchange price. However if the foreign currency were to fall against the dollar, than the trader would take a loss. Seems simple enough, however traders have option to buy or sell that foreign currency at any time and can go both ways of the currency. So even if the foreign currency were to depreciate against the USD, the trader can still make a profit if they were to sell the dollar on the exchange market. To bring some clarity lets take a look at the Yen. If the Yen were appreciate (rises) against the dollar. A trader would than buy the Yen. By buying the Yen the buyer is also selling the dollar on expectation that the exchange price of the Yen will rise in value. The trader will than decide to close the position, selling the Yen with the exchange price higher than when they first bought it leaving them an increase in value or profit. Now if the Yen were to depreciate against the dollar, the YEN/USD exchange price will fall. That would than leave the trader with a loss as the exchange price falls below their purchase level and leave them a loss. In any trading market, the traders have the option of buying or selling......

Words: 860 - Pages: 4

Trading

...will make up the difference to farmers in the form of a direct payment or subsidy. In total, EU dairy farmers receive roughly $15 billion a year in subsidies to produce milk and butter, or about $2 a day for every cow in the EU—a figure that is more than the daily income of half the world’s population. According to the OECD, overall EU farmers receive approximately $134 billion a year in subsidies. The EU is not alone in this practice. In the United States, a wide range of crop and dairy farmers receive subsidies. Typical is the guarantee that U.S. cotton farmers will receive at least $0.70 for every pound of cotton they harvest. If world cotton prices fall below this level, the government makes up the difference, writing a check to the farmers. Some 25,000 United States cotton farmers received some $3.4 billion in annual subsidy checks. Total agricultural subsidies in the United States amount to some $43 billion a year according to OECD figures. Japan is also a large subsidizer, providing some $47.4 billion in subsidies to farmers every year. In relative terms Switzerland, which is not an EU member, spent the most. Subsidies made up a remarkable 68 percent of its farm economy. Iceland was at 67 percent and Norway at 64 percent. European Union subsidies equaled 32 percent of that trading block’s farm economy, while the United States figure was 16 percent. One consequence of such subsidies is to create surplus production. That surplus is sold on world markets, where the extra......

Words: 1625 - Pages: 7

Insider Trading

...Why Is Insider Trading Considered Wrong? Insider trading is defined as “the trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to nonpublic information about the company. The stock market is supposed to be “fair,” and having insider information gives an illegal edge to possible investors. Insiders include those such as officers or directors of a certain company. They can also include investors that own more than a 10% share in a company because those individuals usually get to sit on the board. These individuals have a fiduciary duty to the owners of the company’s stock, meaning that they put their interests before their own. Furthermore, in the United States, insider trading does not have to be committed by an aforementioned “insider.” It can be committed by any shareholder who buys based off of nonpublic knowledge. When one person buys a stock because of nonpublic information, there is also a seller of that same stock that may have not made that sell decision if they knew the same nonpublic information, and vice versa. In addition, future buyers of that particular stock are going to pay inflated prices compared to the investor with insider information because he had access to that information first. Transparency is a big part of keeping the markets balanced, which means that all investors have the same information available to them. For example, it would not be fair if one student had the test bank for a......

Words: 2976 - Pages: 12

The Complete Guide to Day Trading

...THE COMPLETE GUIDE TO DAY TRADING A Practical Manual From A Professional Day Trading Coach Markus Heitkoetter BookSurge, LLC North Charleston, SC The opinions expressed in this manuscript are solely the opinions of the author and do not represent the opinions or thoughts of the publisher. The author represents and warrants that s/he either owns or has the legal right to publish all material in this book. The Complete Guide to Day Trading A Practical Manual From A Professional Day Trading Coach All Rights Reserved. Copyright © 2008 Markus Heitkoetter V2.0 Edited by Nicole Quinlan This book may not be reproduced, transmitted, or stored in whole or in part by any means, including graphic, electronic, or mechanical without the express written consent of the publisher except in the case of brief quotations embodied in critical articles and reviews. BookSurge, LLC http://www.booksurge.com ISBN: 978-1-4196-9563-6 PRINTED IN THE UNITED STATES OF AMERICA To my family for supporting me even in my craziest moments. Table of Contents PREFACE ........................................................................................................ IX INTRODUCTION: WHY DAY TRADING? ....................................................... XIII HOW TO GET THE MOST OUT OF THIS BOOK .............................................. XIX PART 1: DAY TRADING BASICS – WHAT YOU SHOULD KNOW .......1 WHAT IS DAY TRADING?.................................................................

Words: 53673 - Pages: 215

Trading

...Interest Rate |   | Year 1 | Year2 | Year3 | Low |   | 8% | 14% | Middle | 4% | 10% | 16% | High |   | 12% | 18% | Trading Case B02A The spot interest rate is known with certainty, while in year 2 and year 3, there are three possible interest rates. This creates scenarios of interest rates; 9 scenarios in year 1 and year2, and 3 scenarios in year 3. As a result, there are ranges of possible fair value for the bonds.   | Year 1 | Year 2 | Year 3 | 1 | 4% | 8% | 14% | 2 | 4% | 8% | 16% | 3 | 4% | 8% | 18% | 4 | 4% | 10% | 14% | 5 | 4% | 10% | 16% | 6 | 4% | 10% | 18% | 7 | 4% | 12% | 14% | 8 | 4% | 12% | 16% | 9 | 4% | 12% | 18% |   | Year 1 | Year 2 | Year 3 | 1 |   | 8% | 14% | 2 |   | 8% | 16% | 3 |   | 8% | 18% | 4 |   | 10% | 14% | 5 |   | 10% | 16% | 6 |   | 10% | 18% | 7 |   | 12% | 14% | 8 |   | 12% | 16% | 9 |   | 12% | 18% |   | Year 1 | Year 2 | Year 3 | 1 |   |   | 14% | 2 |   |   | 16% | 3 |   |   | 18% |   | Cp Bond | Zero C1 | Zero C2 | Zero C3 | MIN | 98.232 |   | 85.852 | 72.756 | MAX | 104.426 |   | 89.031 | 78.098 | AVG | 101.285 | 96.154 | 87.432 | 75.387 | At the beginning of year 1 , Zero C1 would matured and no longer tradable. For the other three bonds, we have private information which enables us to cut out an interest rate, lefting with 6 scenarios. TRADE AT BEG YEAR 1 (interest not LOW) |   | Cp Bond | Zero C1 | Zero C2 | Zero C3 | MIN | 92.161 |   | 89.286 | 75.666 | ...

Words: 461 - Pages: 2

Complete Guide to Day Trading

...COMPLETE GUIDE TO DAY TRADING A Practical Manual From A Professional Day Trading Coach Markus Heitkoetter The opinions expressed in this manuscript are solely the opinions of the author and do not represent the opinions or thoughts of the publisher. The author represents and warrants that s/he either owns or has the legal right to publish all material in this book. The Complete Guide to Day Trading A Practical Manual From A Professional Day Trading Coach All Rights Reserved. Copyright © 2008 Markus Heitkoetter V1.0 Edited by Nicole Quinlan This book may not be reproduced, transmitted, or stored in whole or in part by any means, including graphic, electronic, or mechanical without the express written consent of the publisher except in the case of brief quotations embodied in critical articles and reviews. ISBN: 978-1-4196-9563-6 PRINTED IN THE UNITED STATES OF AMERICA To my family for supporting me even in my craziest moments. Table of Contents PREFACE......................................................................................................... VIII INTRODUCTION : WHY DAY TRADING?................................................................... XI HOW TO GET THE MOST OUT OF THIS BOOK..................................................... XVII PART 1: DAY TRADING BASICS – WHAT YOU SHOULD KNOW ......................... 1 WHAT IS DAY TRADING?....................................................................................... 2 WHO SHOULD BE DAY......

Words: 53095 - Pages: 213

Trading

...un mismo exportador o cooperativa. - Interesados en desarrollar relaciones cercanas con productores y exportadores y por exigir alta calidad. - Buscan exclusividad y diferenciación de orígenes. - Importan grandes volúmenes, pero el café certificado rara vez representa más del 10%. - Aquí se encuentran traders como Neumann, Volcafe e Ecom Trading que poseen empresas - Independientes para importar café de alta calidad: Interamercan, Volcafe Specialty y Atlantic Coffee, respectivamente. Figura 20. Características de los Importadores de Café Especial certificado en EE.UU. Fuente: Sociedad Consultora Maximixe. Estudio de Mercado (2005) Bird Friendly 14 Fair Trade 50 Organico 66 Figura 21. EE.UU.: Número de Importadores de Café Certificado Fuente: Centro de Inteligencia sobre Mercados Sostenibles. Estudio de Mercado (2005) 95 Tabla 11. EE.UU.: Principales Importadores Especializados de Café Certificado - 2004. Importador / Trader Alterra Coffee Roasters Atlantic Specialty Coffees Café Imports Coffee Holding Co. Inc. Elan Organic Coffees Holland Coffee Inc. InterAmerican Commodities OPTCO Paragon Coffee Trading Co. Royal Coffee Sustainable Harvest Volcafe Specialty Coffee Orgánico x x x x x x x x x x x x Comercio Justo x x x x x x x x x x x x Bird Friendly x x x x x x x x Fuente: Centro de Inteligencia sobre Mercados Sostenibles. Estudio de Mercado (2005) Existen aproximadamente 1,200 tostadores de café en EE.UU., de los cuales 357 ofrecen......

Words: 62612 - Pages: 251