There are a lot of professionals in the stock market who trade commodities, currencies, futures, options and stocks. These professionals are more commonly known as day traders, and they are brokers who buy and sell a large volume of stocks within a single day. Day traders are typically well-funded and knowledgeable in their areas of expertise. On top of the aforementioned attributes, the successful traders also have access to huge amounts of leverages in managing their investment portfolios. Additionally, day traders utilize the practice of high-volume trading, and they take advantage of the short-term changes in prices of volatile and liquid stocks.
A day trader is someone who is a knowledgeable expert in the field. They are different from casual investors as professional traders do not trade merely as a hobby. Instead, they consider it as a mean to earn a living. In order to succeed, they must understand the fundamental driving force of the market because if they don’t, they will be more than likely to lose a considerable amount of money. However, all day traders run the risk of losing money on the job. The successful ones remember the lessons by heart and are able to leverage their experience to make money later on in their careers. If an aspiring day trader expects an astronomical pay day at the very beginning of his career, he is just being delusional.
Professionals in this field gamble a large amount of money, and it is very possible that they might lose it all at the end of the day. Good day traders run their operations independent of their emotions. The position is very stressful as it requires tremendous focus and tranquility at all times. In the life of a day trader, every mistake can lead to dire consequences, and it is nothing like investing a few thousand dollars in a blue chip company.
Day traders employ different strategies to stay ahead of the curve. Some examples include arbitrage trading, scalping, swing trading, etc. They work with state of the art software and analyses backed by complex algorithms. However, as they submerge into their work environments, they should expect to never stop learning new concepts.
Independent Versus Institutional
Independent day traders and institutional day traders are the two main categories of day traders in the stock market. Independent day traders often work alone, and they operate with their own resources. Some may even risk leveraging their own capital to gain an advantage over the public. Independent day traders invest through brokerage firms – with the advancement of technology, it has become an easy process to trade stocks on the phone or online. For day traders adept in the use of computers and the Internet, it only takes a few simple clicks to buy and sell stocks instantly.
On the other hand, institutional day traders operate with the capital and resources provided by investment banks and stock brokerage firms. The capital and resources of these financial institutions typically come from corporate clients, governments and a large number of individual investors. For institutional day traders with big clients, profits have traditionally been high. With their access to the best tools and insider knowledge, day traders from the mid-sized and leading investment banks enjoy a very lucrative return from their investments.
Terrence Schrempp considered numerous business programs, and after earning his degree in finance, he joined the ranks of the institutional day traders.