14.3 Intraday trading

When you take up day trading, the rules that may have helped you pick good stocks or find great money makers over the years while trading normally will no longer apply. This is a different game with different rules. The day trader’s choice of securities and positions has to work out in a day. There’s no waiting until tomorrow to see how the charts play out before committing capital. If the day trader sees an opportunity, he has to go with it. Now. Or it’s gone. When it’s time to buy or sell, it’s time to buy or sell, and that’s all there is to it. Day trading can be a great way to make money all on your own. It’s also a great way to lose a great deal of money, all on your own. Not everyone can be a day trader, nor should everyone try it. If the idea of being in charge of your own business and your own trading account is exciting, then day trading might be a good career option for you.

There are two types of day traders:

Institutional Day Trader: An institutional day trader is a trader who works for a financial institution. These traders have several advantages working for a financial institution, including access to more resources, trading tools, larger accounts (they are usually traders with the institution’s money), state-of-the-art trading and analytical software and support teams. In the end, they still have a boss and they don’t get to keep a majority of their returns for themselves.

Retail Day Trader: A retail day trader works for himself or herself. Retail day traders (who we will simply refer to from here on as day traders) trade with their own money. Most day traders use brokers to facilitate trades for them, and almost all day traders rely on online trading software for their business.