How to do Day Trading - without getting failed

Day trading in stock markets has lots and lots of risks- use this post for information purpose only and please refer to our disclaimer at bottom of this page.

One of the best ways to make money is by trading in the stock market. You can earn a lot of money by buying and selling stocks.

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One way to earn a lot of money is through day trading. Day trading refers to buying and selling financial instruments. Transactions in day trading are usually fast and end in a single trading day. In day trading, you can make a lot of money in a single day.

However, you should know that day trading is business. And, in all kinds of business, you should expect some losses. In day trading, losses can be huge, especially if you don’t know how to day trade.

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Although day trading can offer you huge income, it can also give you severe financial losses. It is know that beginner day traders lose money on the first months of trading and most of them never really get the hang of it and losses interest even if they never really recovered their losses.

People have been arguing that day trading is a very risky business and should stay away from it while others say that day trading is one of the best ways to make a viable profit.

However, no matter what people say, day trading is there to stay in the market place. It can never be denied that day trading is one of the most important aspects in the market place. It keeps the market efficient and liquid.

However, there are successful day traders who earns a lot of money by just day trading. These people have been known to earn more than a million dollars a year.

So, if you plan on doing day trading, you should be prepared on losing money on the first few months of day trading.

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Here are some characteristics of a successful day trader that you should try to copy.

The first thing you should consider is that you should have enough capital to trade. Also, you should only risk money that you can afford to lose. This way, it won’t be too frustrating in case you had a bad day in the market.

The next thing you should consider is that you should never enter this kind of business if you don’t know anything about the market. You should be knowledgeable about the market in order to be successful in day trading.

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As you might have heard, you need discipline. Many day traders end up losing a lot of money because they don’t have the patience and the discipline to day trade. You should know how to plan trades and use it as your strategy.

To get better at anything you do, you need to practice. Experienced day traders practice a lot and formulate different kinds of strategy in order to minimize loss and maximize profit. There are different kinds of simulated day trading software available. Use it.

These are some of the things you should know about day trading. In time, if you follow these guidelines, you can be sure of success as a day trader.

There are six basic strategies day traders use to make a profit. These six strategies are:

• Trend following

• Playing news events

• Scalping

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• Range trading

• Covering spreads

• Technical trading

In trend following, a day trader who uses this strategy buys stocks that are rising or, short-sells it if it is falling. They always expect that the trend of the stock (rising or falling) will continue.

In range trading, a day trader who uses this strategy buys stocks at a low price and sells it at the high. They assume that once a stock hits a high, it will eventually fall back to low and continue in that direction for some time.

Playing the news strategy is the basic and most common strategy that most day traders do. They will buy a stock that has announced good news and will sell a stock if it announced bad news.

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Scalping is a strategy where day traders establishes and liquidates a position very quickly. This strategy usually takes place within minutes or even seconds.

Shorting stocks strategy is when day traders assume that the stock they purchased will rise. Another shorting stocks strategy is that they tend to borrow stocks from brokers and sells it hoping that the price will go down and buy it again.

Day trading is not an easy thing to do. You need to have the following qualities in order to be successful in this kind of business.

Firstly, you have to consider that day trading is mentally and psychologically challenging. You should always be focused on the trades. You should also know how to decide what to do quickly when you see a trend in a particular stock.

Secondly, you have to know how to manage your money. Many people who have failed in day trading didn’t manage their money well enough. They tend to spend a lot of money more than they can afford in order to make a huge profit.

Always remember that day trading is not easy on the first months. This is why you should expect losing when you are just starting to day trade. Also, you will need enough capital in order for you to be successful in day trading.

Investment in the equity shares of (BSEL) Bombay Stock Exchange Limited

Attensions to the investors: read for investing in shares of BSEL (Bombay Stock Exchange Limited)
1.1 Attention of the investors is invited to the Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges) Regulations, 2006, (hereinafter 'the Regulations'), notified by Securities and Exchange Board of India (SEBI) on 13th November,2006.

1.2 Chapter III of the Regulations inter-alia stipulates the shareholding restrictions and eligibility criteria for holding equity shares in the recognized Stock Exchange as under:

1.2.1 Shareholding and transferability restrictions
Regulation 8 (1) of the Regulations provides that no person shall, directly or indirectly, acquire or hold more than five per cent in the paid up equity capital of a recognised stock exchange at any time after commencement of these regulations.

1.2.2 Eligibility criteria for persons acquiring or holding more than one per cent equity shares in a recognised stock exchange

Regulation 9. (1) of the Regulations provides that no person shall, either individually or together with persons acting in concert with him, acquire and/or hold more than one per cent of the paid up equity capital of a recognised stock exchange after commencement of these regulations, unless he is a fit and proper person and has taken prior approval of the SEBI for doing so.

Further, regulation 9(2) provides that for the purpose of sub-regulation (1), a person shall be deemed to be a fit and proper person if -

1. such person has a general reputation and record of fairness and integrity, including but not limited to -
1. financial integrity;
2. good reputation and character; and
3. honesty.
2. such person has not incurred any of the following disqualifications -

1. the person or any of its whole time directors or managing partners has been convicted by a Court for any offence involving moral turpitude or any economic offence, or any offence against the securities laws;

2. an order for winding up has been passed against the person;

3. the person or any of its whole time directors or managing partners has been declared insolvent and has not been discharged;

4. an order, restraining, prohibiting or debarring the person, or any of its whole time directors or managing partners from dealing in securities in the capital market or from accessing the capital market has been passed by the Board or any other regulatory authority and a period of three years from the date of the expiry of the period specified in the order has not elapsed;

5. any other order against the person or any of its whole time directors or managing partners which has a bearing on the capital market, has been passed by the Board or any other regulatory authority and a period of three years from the date of the order has not elapsed;

6. the person has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force; and
7. the person is financially not sound.

In terms of regulation 9(3) If any question arises as to whether a person is a fit and proper person, the SEBI's decision on such question shall be final.

2.1 Under the BSE (Corporatisation and Demutualisation) Scheme, 2005 the Exchange has to ensure that "Public" other than shareholders having trading rights continuously hold at least 51% of equity shares of the Exchange.

2.2 In terms of regulation 2 (h) of the Regulations "public" includes any member or section of the public but does not include any share holder of the recognised stock exchange having trading rights therein or any associate of such shareholder;

2.3 According to the clarification received from SEBI vide MRD/DSA/SE/Cir-09/08 dated April 17, 2008 the term "shareholder having trading rights' mentioned in the Regulations would mean a shareholder who has a trading interest in the stock exchange, whether directly or indirectly through a person having trading rights.

Explanation: a shareholder having trading interest 'indirectly' in relation to a person having trading rights would be understood in the same manner as the term 'associate' is in relation to a shareholder having trading rights under regulation 2(1)(b) of the Regulations.

2.4 Attention of the Investors is also invited to the term "Associate" in relation to a shareholder having trading rights in a recognised stock exchange as defined in the Regulations.

In terms of regulation 2 (1) (b) of the Regulations "associate" in relation to a shareholder having trading rights in a recognised stock exchange means a person -

1. who directly or indirectly, by himself or in combination with other persons, exercises control over such shareholder or holds substantial shares entitling not less than fifteen per cent of the voting rights in such shareholder being a body corporate; or

2. over whom such shareholder, directly or indirectly, by itself or in combination with other persons, exercises control; or

3. whose director or partner is also a director or a partner of such shareholder , being a body corporate or a partnership firm, as the case may be; or

4. who is a holding company or subsidiary company of such shareholder or acompany under the same management as such shareholder; or

5. who is a relative of the shareholder being a natural person under Schedule IA of the Companies Act, 1956 (1 of 1956); or
6. who is a sub-broker of the shareholder in that stock exchange; or

7. who acts in accordance with instructions of such shareholder in the exercise of voting rights and other rights in the recognised stock exchange, directly or indirectly.

3 Attention of the Investors is further invited to the term "Persons Acting in Concert" [for the purpose of regulation 9(1) of the Regulations] as defined under Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (SAST Regulations)

In terms of regulation 2 (e) of the SAST Regulations "person acting in concert" comprises,-

1. persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal), directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company,

2. without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established :

1. a company, its holding company, or subsidiary or such company or company under the same management either individually or together with each other;
2. a company with any of its directors, or any person entrusted with the management of the funds of the company;
3. directors of companies referred to in sub-clause (i) of clause (2) and their associates;
4. mutual fund with sponsor or trustee or asset management company;
5. foreign institutional investors with sub-account(s);
6. merchant bankers with their client(s) as acquirer;
7. portfolio managers with their client(s) as acquirer;
8. venture capital funds with sponsors;

9. banks with financial advisers, stock brokers of the acquirer, or any company which is a holding company, subsidiary or relative of the acquirer :
   
   Provided that sub-clause (ix) shall not apply to a bank whose sole relationship with the acquirer or with any company, which is a holding company or a subsidiary of the acquirer or with a relative of the acquirer, is by way of providing normal commercial banking services or such activities in connection with the offer such as confirming availability of funds, handling acceptances and other registration work;

10. any investment company with any person who has an interest as director, fund manager, trustee, or as a shareholder having not less than 2 per cent of the paid-up capital of that company or with any other investment company in which such person or his associate holds not less than 2 per cent of the paid-up capital of the latter company.

Note: For the purposes of this clause "associate" means,-

1. any relative of that person within the meaning of section 6 of the Companies Act, 1956 (1 of 1956); and

2. family trusts and Hindu undivided families.

4.1 In view of the aforesaid provisions, any person desirous of acquiring the shares of Bombay Stock Exchange Limited (BSE) should adhere to the following conditions:

1. That under the Regulations, there are restrictions on holding (either directly or indirectly) more than 5% of the paid up capital of the BSE;

2. That under the Regulations there are restrictions on holding (either individually or together with persons acting in concert with him) more than 1% in the paid up equity capital of BSE without complying with "fit and proper" criteria.

4.2

In order to comply with the aforesaid provisions as stipulated by SEBI, investor(s) before acquiring equity share(s) of BSE, are hereby advised to disclose/declare in the prescribed format given hereunder to the Exchange, which inter alia include among other things:

1. Whether such investor(s) is falling under the category of "Public" / "Trading Member of BSE" / "Associate of shareholder having trading rights in BSE";

2. details of the persons with whom he is associated [in terms of regulation 2(1)(b) of the Regulations]; and

3. details of the persons acting in concert [for the purpose of regulation 9(1) of the Regulations] with such investor(s) as defined under SAST Regulations.

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