 | |  | |  | |  | |  |
| Some Definitions about Day-Trading |
What is Day-Trading ?
Day-trading is the buying and selling of a financial instrument (stock, currency, future, option, etc., etc.) on a daily basis. True day-trading involves
the opening and closing of a position on the same business day. For example, a day trader can buy a stock at 10:00 o'clock in the morning and
then sell it an hour later. The number of transactions that a daytrader executes during a single tradingday depends greatly on the trading style or
system that the trader is using as well as the behavior of the market on that particular day (if the market frequently moves up and down on a
consistent basis, this will generate more transactions or trades). Although stock daytrading is still the most popular form of daytrading in the
world, restrictive regulations during the late nineties has caused many traders to flock to other markets like the forex (foreign exchange) market.
This is a reason why many daytraders are now daytrading future contracts and currencies rather than stocks.
Day-trading is the buying and selling of a financial instrument (stock, currency, future, option, etc., etc.) on a daily basis. True day-trading involves
the opening and closing of a position on the same business day. For example, a day trader can buy a stock at 10:00 o'clock in the morning and
then sell it an hour later. The number of transactions that a daytrader executes during a single tradingday depends greatly on the trading style or
system that the trader is using as well as the behavior of the market on that particular day (if the market frequently moves up and down on a
consistent basis, this will generate more transactions or trades). Although stock daytrading is still the most popular form of daytrading in the
world, restrictive regulations during the late nineties has caused many traders to flock to other markets like the forex (foreign exchange) market.
This is a reason why many daytraders are now daytrading future contracts and currencies rather than stocks.
What is a Day-Trading Computer ?
A day trading computer is a computer system that will be predominantly used by a daytrader to trade. A trading computer is a day trader's
gateway to the market. Consequently, a day trader must make sure that his trading computer system is properly equipped. With the constant
drop in computer prices and rapid advancements in technology, a daytrader could acquire a great trading computer for under $2,000. The trading
computer must have plenty of random access memory and a powerful microprocessor. It should also include a video card that allows multiple
monitors to be connected to the same computer. This will give the day trader greater flexibility in arranging his trading screen by using multiple
charts, order entry sections, account information, etc., etc.. The trading software will run on the trading computer and will allow the trader to trade
stocks, currencies, futures, or any other financial instrument of his choosing. It is preferred that the daytrader also use a high speed Internet
connection like DSL or Cable Modem. The day trading computer system should be completed with the appropriate antivirus software and
firewall as well as a power back up system (UPS) for power outages.
A day trading computer is a computer system that will be predominantly used by a daytrader to trade. A trading computer is a day trader's
gateway to the market. Consequently, a day trader must make sure that his trading computer system is properly equipped. With the constant
drop in computer prices and rapid advancements in technology, a daytrader could acquire a great trading computer for under $2,000. The trading
computer must have plenty of random access memory and a powerful microprocessor. It should also include a video card that allows multiple
monitors to be connected to the same computer. This will give the day trader greater flexibility in arranging his trading screen by using multiple
charts, order entry sections, account information, etc., etc.. The trading software will run on the trading computer and will allow the trader to trade
stocks, currencies, futures, or any other financial instrument of his choosing. It is preferred that the daytrader also use a high speed Internet
connection like DSL or Cable Modem. The day trading computer system should be completed with the appropriate antivirus software and
firewall as well as a power back up system (UPS) for power outages.
What is a FUTURE-Contract ?
A future is a contract to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified
time in the future. . These securities are also called derivatives because their value derives from the underlying commodity. Futures have
typically been traded by companies, financial institutions and rich investors to hedge risks or reap gains from fluctuations in commodity prices.
Today, private investors can trade more-exotic futures contracts based on interest rates, stock-market indexes and even the weather.
A future is a contract to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified
time in the future. . These securities are also called derivatives because their value derives from the underlying commodity. Futures have
typically been traded by companies, financial institutions and rich investors to hedge risks or reap gains from fluctuations in commodity prices.
Today, private investors can trade more-exotic futures contracts based on interest rates, stock-market indexes and even the weather.
| For more information about "Futures' : Part 1 click here / Part 2 click here / Part 3 click here / Part 4 click here / Part 5 click here |
What is "Bid and Ask" ?
Bid" and "Ask" are the names given to the prices submitted by buyers and sellers in the market respectively. Since in the trading of every
financial instrument, there are people trying to buy as well as sell that instrument at any given point in time, there must exist two prices instead of
one; the price that buyers are willing to pay (Bid) and the price that sellers are willing to accept (Ask). This is as true for stocks as it is for futures
and currencies. The "Best Bid" for a stock (or any other financial instrument) is the best price (highest price) that someone is willing to pay for
that stock at a particular point in time. Conversely, the "Best Ask" is the lowest price (best price) that a seller is willing to accept for a stock. A Bid
is made up of an actual Buy Limit Order that has been placed in the market. An Ask is made up of an open Sell Limit Order. When day trading,
traders must know exactly what Bid and Ask mean and how to use them.
Bid" and "Ask" are the names given to the prices submitted by buyers and sellers in the market respectively. Since in the trading of every
financial instrument, there are people trying to buy as well as sell that instrument at any given point in time, there must exist two prices instead of
one; the price that buyers are willing to pay (Bid) and the price that sellers are willing to accept (Ask). This is as true for stocks as it is for futures
and currencies. The "Best Bid" for a stock (or any other financial instrument) is the best price (highest price) that someone is willing to pay for
that stock at a particular point in time. Conversely, the "Best Ask" is the lowest price (best price) that a seller is willing to accept for a stock. A Bid
is made up of an actual Buy Limit Order that has been placed in the market. An Ask is made up of an open Sell Limit Order. When day trading,
traders must know exactly what Bid and Ask mean and how to use them.
What is a Market-Maker ?
The marketmaker is a dealer who stands ready to buy and sell, posting prices and effectively creating the continuous secondary market with the
help of brokers who link the dispersed market investors. So a secondary market creates liquidity as marketmakers allow investors to on-sell
financial assets for cash with speed and at the going market price. Marketmakers trade on behalf of clients and on their own accounts.
You'll most often hear about market makers in the context of the Nasdaq or other "over the counter" (OTC) markets. Market makers that stand
ready to buy and sell stocks listed on an exchange, such as the New York Stock Exchange, are called "third market makers." Many OTC stocks
have more than one market-maker.
Market-makers generally must be ready to buy and sell at least 100 shares of a stock they make a market in. As a result, a large order from an
investor may have to be filled by a number of market-makers at potentially different prices.
The marketmaker is a dealer who stands ready to buy and sell, posting prices and effectively creating the continuous secondary market with the
help of brokers who link the dispersed market investors. So a secondary market creates liquidity as marketmakers allow investors to on-sell
financial assets for cash with speed and at the going market price. Marketmakers trade on behalf of clients and on their own accounts.
You'll most often hear about market makers in the context of the Nasdaq or other "over the counter" (OTC) markets. Market makers that stand
ready to buy and sell stocks listed on an exchange, such as the New York Stock Exchange, are called "third market makers." Many OTC stocks
have more than one market-maker.
Market-makers generally must be ready to buy and sell at least 100 shares of a stock they make a market in. As a result, a large order from an
investor may have to be filled by a number of market-makers at potentially different prices.
| Page 2 : Click here |
| Back to definitions : Click here |
| E-Mail : Herman.Bogaerts@Wanadoo.fr OR Admin@DayTrader-Generation.com |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| Daytrader-Generation “No Gambling but True Working Tools to Achieve Profit” "Day-Trading, Business of the Future !" |