Day trading basics – the benefits, the risks, the realities. We cover these essentials with special reference to emini futures trading.
Day trading is interesting to certain folks for three main reasons;
- People who are unemployed are wondering if day trading the stock market may be an answer to replacing income from a regular job.
- People who are familiar with stock and options swing trading or momentum trading and now want to shorten the time horizon to day trading
- People who have retired from regular employment and who want to make some money on the side.
These are all legitimate reasons for exploring day trading but in all three cases, and especially in the first and last cases, we caution you against jumping in prematurely, before having an in-depth understanding of day trading techniques and day trading basics. Futures trading is not suitable for all types of investors as there is a substantial risk of loss in trading futures (and options). Many folk who have tried day trading as a profession have failed because they failed to do adequate preparation and to obtain advice from those have learned to do it successfully.
E mini futures trading is one of the most popular ways to trade the stock market as is trading with certain ETF (Exchange Traded Funds).
E Mini Future Trading – the Pros and Cons
Because the benefits of day trading align so closely with those of futures trading, this list covers both:
The benefits:
- Work from any location with a high speed internet connection – no geographic restraint.
- Low overhead costs – a little equipment, a connection, a desk in the spare room.
- Volatility in the stock market generally can be very frustrating to the short or long term investor and may result in frequent losses or very reduced gains. Volatility in day trading is the trader’s friend (most of the time) and E-mini futures will track the volatility closely.
- Low initial capital required – this advantage is unique to internet day trading of futures trading – if you day trade stocks, ETFs or options you will need a minimum of $25,000 in your account. See my post “How much money do I need to start?”
- Gains can be made when the market is going up, down or sideways. (See day trading techniques)
The disadvantages:
- Day trading is a ruthless pursuit which endeavors to gain from causing the other person to lose. You can be on the wrong side of this equation.
- Day traders need to have or develop a unique psychological approach to actions and situations which otherwise could cause health-damaging stress. (See good day trading advice – the right mindset). Trading e mini futures is best approached by applying certain mechanical emini trading systems which provide predetermined entry and exit point strategies and which therefore take the emotions of fear and greed out of the process. The removal of these emotions enables the trader to be mentally on a par with the professional who is also trading with preset plans and not “by the seat of the pants”.
If you are serious about eminis trading then you need to start with day trading basics. The best way to get the basics is to get in depth training via a high quality day trader course. One that we highly recommend is this Day Trading Home Study Course on day trading E-minis. This is also the lowest cost available for this course, so do not miss out.
More on why E-minis for day trading.
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