Day Trading Online

Written by Jacey Harmon
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Before the Internet, day trading was limited mostly to those found on the exchange floor. Today, with the help of many online brokers, everyone has the opportunity to become a day trader. Day trading is the buying and selling of securities in a single day. Day traders will only hold a stock for minutes and will never have a position over night.

Day trading involves a high degree of risk, which isn't suitable for every investor. Recognizing the risks involved with day trading, the National Association of Securities Dealers (NASD) requires more detailed information from a person who wants to open a day trading account. The NASD considers a day trader as person who engages in four or more day trades in a five business day period. Brokers are required to ensure, through reasonable diligence, that day trading is a suitable activity for the investor opening a day trading account.

It is only after an investor has been approved for a day trading account that they can engage in day trading activities. The main goal of day trading is to "pinch" a penny or two per trade, several times a day. The constant buying and selling will result in heavy commission costs for the trader. Annual commission costs for active day traders averages over $100,000 a year. Most online brokers will have commission fees of $10: equaling at least $20 per "round trip" trade.

Day Trading Tools

One of the most important tools a day trader will need is access to real-time quotes and market maker information. The quotes found through most online services are delayed by at least 20 minutes. This is unacceptable for a day trader as they need to have up to the minute market information in order to be successful. Most online brokers will have real-time quotes available for day trading accounts; this may involve extra fees on top of any commission costs.

There are plenty of services on the Web that are meant to aid day traders in finding trading opportunities. These services will reduce the amount of time it takes to research the market to find tradable stocks. These day trading services will likely charge a subscription fee, adding another cost to day trading activities. Online services will not reduce the risk involved with day trading and should be thoroughly researched before being used.

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