How do people make money day-trading?

Question

I have always been taught that day-trading is a bad route. Yet my brother knows someone making lots of money doing it, and he's a Sophomore in college. It sounded a bit unrealistic to me, but apparently it's true. How is he possibly doing this?

Answer 1

The basic idea behind making money at day-trading is to identify those stocks which are going to 'turn around' quickly, meaning that they are at or near their low point and will rise in value over a short amount of time.  If you can identify these stocks you can make a good bit of money by buying them low and selling them off as they climb in value.  The trick is to hold them just long enough to make a profit and then sell them off.  You don't want to wait until they "top out" and start to decline because then they will be harder to sell.  The profit from one sale is then used to repeat the process.  Obviously, if you make the wrong choices you can lose a good bit of money this way.

While this is a simplistic explanation, it's basically how the stock market works.  The difference is that most investors do not buy a stock with the intention of selling it off fairly quickly for a fast profit.  They usually buy as a long-term investment.

Answer 2

:)

I am a day trader and often try to derive profit from the disparity in currency rates at various points of time. People who try to make some huge profit can incurr loss using this techniques but if we try to capture small pips then its a winning strategy.

One of the fund Manager of FINEXO suggested me to try this once when i was looking up for high returns. Surprisingly i made huge pips in just 1 hour and thats how i became a Day trader.

Anyways the basic requirements for successful Day trading are:

1. Excellent Command on Technical charts.

2. Look beyond what common man does.

3. Foresightedness

4. Be Different.

5. Good Source of market news and technical charts

6. Ability to draw conclusions from market updates.

If you have these you can very easily succeed here. I am using  Finexo charts and updates which are quite accurate and reliable for me. If you have other sources it would be an added advantage.

Answer 3

The notion behind day trading is that you, a complete amature, somehow is going to beat out the people who get paid big bucks and have access to massive amounts of research.  The vast majority of day traders loose money.  Your brother's friend is either an exception to the rule, or he's been very lucky and someday his luck will run out and he will loose like everyone else has.  Skill is a poor subsitute for having good luck.

Most day traders have a sheep mentality.  If a stock is going up, they buy.  If a stock is going down, they sell.  The way to make real money in the market is to buy a stock before it goes up; to sell a stock before it goes down (while it is still on the way up, but will peak soon).  See the last few sheep who jump onto a stock when it is going up and about to peak, they bought high, and when it starts falling and they realize it, they try to sell and end up selling low (or at least lower than what they bought it for).  

Day traders have a tendancy to create their own momentum.  A stock goes up a little.  Without day traders, that might have been it, but now they all jump on buying this stock, driving the price up and up and up.  And who's selling this stock as the price increases?  Day traders?  No, they are all waiting for signs of it dropping.  It's the real traders who bought low and are now selling high.  What would have been a small bip in the prices gets turned into a big wave (both up and down) by all the day traders.

Answer 4

About 90% of day traders fail. That is why its a bad route. You sort of need a gamblers mentality and need to be emotionally detached from the concept of money. It takes a while to learn to control yourself and your emotions so the learning curve is hard. However, for those who survive trading can offer the advantage of independence and great financial compensation.

Answer 5

http://www.sec.gov/answers/daytrading.ht...