How To Manage Day Trading ?

With the technology boom that has changed the way business is done across the globe, one unintended result has been the rise of day trading. Day trading is a risky and stressful form of trading that involved buying stock and selling it within one days time. It’s thought that if this is done enough time, with the right foresight and financial advice, that a person can make quite a lot of money each day. Day trading wasn’t even an option before the 1990’s. Here’s why.

Back before the computer age allowed instant stock buying and selling, the financial settlement period use to take much, much longer. It was possible to buy a stock, and not have to pay for it for another 10 business days. It was common practice in those days to try to sell the stock for more than it was worth before you had to pay for it in an attempt to make a profit. Many traders who had no actual money of their own would make their livings this way, and it’s obvious how dangerous this was.

A day trader has many different strategic options that he or she can follow to try to make a profit. The first is trend following. This is a tool that is used by all investors and its simply the idea that stocks that have been going up will continue to go up and stocks that have been going down will continue to go down. Obviously, this isn’t always the case, which makes trend following a dangerous method to base all of your day trading investments on.

Range trading is another tool used by day traders. This is the practice of buying and selling stocks once they reach their respective highs and lows. The trader figures that a stock that is headed up will continue to go up, but only until it reaches a new high, and then it’s due to go back down. The same is thought for stocks headed the other way. Once they reach a brand new low, they tend to rebound and head back up.

Playing news is another common tool of the day trader. The technique is exactly what it sounds like, buying stock that has just released good news and selling stock that has just released bad news.

While none of these techniques are guaranteed, day trading is increasing in popularity every year, and while the potential for significant loss is very real, many continue to walk the tightrope that is day trading.

9-11 and the New York Stock Exchange

Maybe no event in American history was as dramatic as the attacks of September 11, 2001. When the attack on Pearl Harbor happened, we had live radio broadcasts bringing updates, and the next days newspaper how photographs of the carnage, but with 9/11, we had live, crystal clear television pictures beamed right into our living rooms. While we still take pause to think of that horrendous day, the world’s financial markets took a hit like they never have before as the ripple effect from Ground Zero was felt all around the world.

When the attacks happened, and because of how close the World Trade Centers were located to Wall Street, trading wasn’t even started. Everyone that had shown up to work that day was told to stay inside until it was safe. Many people inside the exchange reported feeling the ground shake as the two towers collapsed, and the exchange became a refuge for those fleeing the giant cloud of dust, smoke and debris that appeared once the towers fell.

The buildings that hold the New York Stock Exchange were not damaged during the attacks, but a major telephone bunker than held the phone system for the entire area located near the World Trade Center was severely damaged, hence making communication on the floor of the exchange impossible.

The stock market remained closed until September 17. It would turn out to be the longest that the market would remain closed since 1933 and the Great Depression. During it’s first day of trading after the attacks, the market lost over 680 points, the single biggest one day drop in the exchanges history. While the drop only accounted for a little over 7 percent, it is still considered a major event.

By the end of that first week back open, the Dow Jones had lost over 1360 points or 14 percent of its value. It would go down as the worst week in market history. The total money losses during that time were estimated to be around 1.2 trillion.
The events of September 11 led to a dramatic increase in security around the exchange, as many feel it could be a target in future attacks.

The events of 9/11 will live on in the minds of everyone who lived through it. For those who had shown up for a day at work on Wall Street, the event is difficult to forget. The NYSE came through it stronger and so did the nation.