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What's day trading?

Day trading consists of the direct opening and closing of stock positions with major stock exchanges, either using a computer on the trading floor of a branch office of a day trading firm, or using one's home or business computer to access an internet broker. The keyword in this definition is direct. In day trading, a trader has direct electronic access to NASDAQ market maker or NYSE specialists.

The market makers are NASD brokers and dealers who buy or sell NASDAQ stocks for the accounts of others, engage in the securities business for their own proprietary accounts. In essence, the market makers are stock merchants. One NASDAQ stock will have many market makers who are continuously trading in that stock and thus making a market for that stock. On the other hand, one NYSE stock will have one assigned NYSE specialist. The role of the NYSE specialist is to maintain a fair and orderly market in that security. The specialist may act either as a broker and execute orders for other securities brokers or as a dealer in a principal capacity when trading for his or her wo0n account. The specialist will take on the role of a principal infrequently in order to maintain stock marketability and counter temporary imbalances in the supply and demand of that security.

The day trader does not need a stock broker. The trader is not using a telephone to call a stockbroker, and the broker is not relaying that order to the brokerage firm's order desk. The clerk is not routing that order to the market maker. Day trading firms eliminate all that. Consequently, day trading firms have eliminated time delays and most of the expenses associated with middlemen processing trade orders. The day traders are their own brokers, and their order executions are fast and affordable.

The day trader can simply key in the stock symbol on a computer that has specialized trade execution software, press the appropriate function key, and buy or sell shares of stock on a major exchange. The software used by the day trading firms for order execution is relatively user-friendly and provides an efficient interface between the stock exchanges and the day trader.

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13 comments:

  1. Your investing tips help me to learn something new about stock trading each day. Having direct electronic access to the markets as is the case with day trading makes things so much easier for traders.

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  2. Day trading is covered well in the free stock course. There is so much to learn from this.

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  3. Awesome stock education about day trading.i think day trading is easier to carry out because alot of things are elimibated.

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  4. To be successful in the penny stocks market every serious trader needs a firm understanding of what day trading is and how it works. This breakdown is a treasure of information to traders.

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  5. Day trading by its nature eliminates all the middle people i.e the stock brokers. As such the trader must always be on the lookout for good investing tips and research to stay ahead of the curve.

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  6. It's worth noting that before someone delves deep into day trading they should invest heavily in their stock education. If this isn't done they stand to lose a lot of money based off their ignorance.

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  7. The free stock course is gradually making me a professional in penny stock.. thanks a bunch...

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  8. I love the fact that in day trading you don't need a broker. This means that you will save the cost that would have been incured.

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  9. Investing tips can be really helpful when it comes to trading. A lot of people told me about it and that made me realize that I really have to know these kinds of tips. Thanks for this!

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  10. Trading in penny stock requires a lot of information about the market. Great thanks for this stock education that is so enlightening.

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  11. This free stock course is really something for budding traders. It gives them the knowhow of what one needs to know and understand before going forward with it. Thank you so much for sharing.

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  12. Thank you for this detailed information on day trading. Besides it saving you many, it can also go a long way to save your time as well.

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  13. Budding investors in stocks will learn alot about this post and this topic too then also try to have some investing tips before starting off with penny stock.

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