Penny Stock Day Trading

What is Day Trading?

Day trading is the buying and selling of a security within a single trading day, usually several times with one or more stocks. Fortunes are made and lost so quickly when it comes to day trading. This type of strategy can be extremely profitable for some, but the trader must be on his or her toes at all times, and be prepared to lose the money they’re playing with. Many inexperienced traders are entering the market with this particular strategy, only to see their savings lost with a drop of the hat. Every day trader loses money; they must simply (or not so simply…) make money more often than they lose it. In order for this strategy to be successful, the trader must have the skills, mindset, and resources needed to succeed.

Before one considers day trading, they should know the definition of the term, “Pattern Day Trader”. A pattern day trader is one who buys and sells a specific stock within a trading day at least 4 times in a 5 day period, and whose day trades make up greater than 6% of their trading activity within the same 5 day period. A buy and sell of a stock is often referred to as a “Round Trip”. If the round trip is split between days, ie - the buy occurs one day, and sell the next, this does not count as a day trade. To be a pattern day trader without getting into trouble with the SEC, you must maintain an equity balance of $25,000 in a margin account. This can include cash and stock.

The day trader must have knowledge and experience in the marketplace, sufficient capital, and a strategy. One cannot simply jump into the marketplace because their friend is making money. While day trading is a common term people use to describe people who trade stocks from home, it is not a specific strategy. People who day trade incorporate other strategies such as momentum, fundamental, or technical trading to find and profit from stocks. Day trading is really only a definition for how long they actually hold the stock.

One of the most important traits of the successful day trader is their mindset. They have to be almost robot-like, keeping emotion completely out of the decision making process. They must use their skills and knowledge alone to cut losses quickly and maximize profits when the opportunity arises. The trader that hopes for a recovery as a stock is heading south is more often going to lose money than the trader that cuts their losses early and moves on to find the next profit.

This site will give you some tools and knowledge to make your trading easier, and help you find a strategy that works for you. Whether that strategy includes day trading is up to you, however we recommend starting out slow so that you learn more as you go. When you have proven to yourself that you can consistently harvest profits on stocks, then perhaps day trading is worth a try. Check out our information on more trading strategies by using the links on this page.

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