| A day trader is a stock trader who holds a position | | | | money managers fail to do better than a simple index |
| with a stock for only a very limited time - sometimes | | | | fund which follows a time-in-the-market strategy of |
| merely several minutes - before he makes a trade | | | | buy and hold. |
| with that stock. People who practice this are called | | | | In spite of the deck being stacked against them, day |
| day traders because most of their positions are | | | | traders continue trying to make their fortune their |
| opened, and closed, in the same trading day. "Buy | | | | way. Most lose money...but, they sense one thing |
| and hold" strategies are not for them. | | | | that happens to be true: if the market is able to be |
| Day trading is controversial to say the least, and the | | | | timed correctly, they will make a killing. It's all a |
| fact is that over 90% of day traders lose money | | | | matter of figuring out how to time it. If they could |
| instead of making it. The typical day trader is seen as | | | | do that, they would have that special knowledge that |
| little more than a gambler in a casino. Yet, as we all | | | | we mentioned above. But is this possible? |
| know, there are some gamblers who are | | | | It is possible if they use one special tool - a day |
| professionals - and millionaires. They must know | | | | trading robot. These artificial intelligence (AI) |
| something that few other gamblers know. If a day | | | | programs have been around in the investment world |
| trader is to be successful, he too must know | | | | since even before the Internet. They have become |
| something that few others know. | | | | far more advanced in the last almost 20 years; and |
| Day traders suffer from the problems of market | | | | the Internet has made it possible for them to be |
| timing. With market timing, an investor tries to predict | | | | used by many more people. Institutional money |
| the market's future direction. Economic data, including | | | | managers have used day trading robots to help them |
| technical indicators and even the financial and | | | | for many years, and those managers who make the |
| investment news, may be used to help the trader | | | | best use of them are among the most successful. |
| determine what stock positions to take (short or | | | | These AI programs are able to learn from past |
| long) and when to sell or buy. However, there are | | | | market timing mistakes, and from analysis of stock |
| many investors who believe that it is impossible to | | | | charts and other market data. They learn just like a |
| time the market. There are just too many variables, | | | | human trader would, except since they don't need to |
| they say; and if there are any patterns underlying | | | | sleep or eat and have no other distractions or things |
| market timing, they are too complex and subject to | | | | to think about, they can learn far, far more rapidly |
| too much "noise" for anyone to figure them out. | | | | and arguably with more depth. As a trader, you can |
| Clearly, there are day traders who disagree with this | | | | program your robot with your preferred trading |
| - but, then again, there is that fact that over 90% of | | | | strategy parameters, and the program will learn them |
| these lose money, rather than make money. | | | | and give you feedback as to how well they do over |
| There is a lot of timing risk with active day trading. | | | | a period of time so that you can make adjustments |
| Timing risk is the margin of error that a day trader | | | | to the program if you want to. |
| takes on when s/he buys into a position that s/he | | | | Day trading robots are also faster to move than a |
| won't make the right move (or already did not make | | | | human can typically be. They use an electronic trading |
| the right move depending on the stock price at the | | | | platform that enables them to place orders instantly, |
| time of purchase) to capitalize as much as possible on | | | | so that loss due to order lag is minimized. |
| the latest market movement. From market risk | | | | So, for the day trader, the day trading robot is |
| analysis comes the old adage that it is better to have | | | | indispensable. There is no good reason to do this kind |
| "time in the market" than to "try timing the market". | | | | of trading without the all-important help of AI. But |
| Evidence for this is that the majority of institutional | | | | with it, making a fortune in day trading is possible. |