Why is daytrading generally not considered real investing experience?

Question

i'm new to investing so any help would be greatly appreciated. thanks.

Answer 1

The definition of investing is putting your money to work to earn a return on the investment. You can invest in land, rental property, collectibles, stocks, bonds, and other investments. Investors buy the investment in the hope that it will pay a return in the form of rent, dividends, or royalties, or by increasing in value over time. The investment may be short-term or long-term, depending on the investor.



Day trading is the work of buying a stock in the hope of selling it a few minutes or a few hours later for a profit. It is predicated on the fluctuation of market prices of the stock regardless of what the company does whose stock the trader is trading, or how much it earns, or how much it pays in dividends. A day trader may buy 10,000 shares of a stock for $15 and sell it a few minutes later for $15.10 for a $1,000 profit. It is just as likely that he sells it at a loss if the price goes down. This is not investing, it is speculating on the price change. Day trading is a tough business requiring hard work, strong nerves, and total lack of emotion about price movements. Good day traders can make a good income, but they work hard for it. they depend on their capital and their skill, their hard work, and fortitude. Some lose money and give up. In any case, they are not investors. They are only looking for a favorable turn in the price of what they buy or sell.

Answer 2

Day trading is a speculative practice. In doing so, a trader will try to anticipate the movement of the markets and of other people's buying habits, in an attempt to outmaneuver others and make a profit. Day traders usually do not study the fundamentals of the companies in whose stocks they buy. Rather, they only focus on stock prices.



Unfortunately, most day traders do not make a significant profit. The reason that this (and many other stock picking procedures) usually does not produce long-term superior results is that the trader has to be correct such a high percentage of the time in order to overcome the extra costs of trading and research.



Download my free book at http://www.invest-for-retirement.com and go straight to chapters 7 and 8 for a more detailed explanation.

Answer 3

I've been active in the stock market for over twenty years.



All told, I may have spent over ten thousand dollars in broker's commissions.



I have so many stories to tell about all kinds of corporations.



The best advice I can offer is to learn about every corporation you invest in. So many seem strong on the surface, and later you find out some serious flaws.



Stock prices never reflect the truth. The prices fluctuate rapidly which has attracted many day traders who are just in for the slight price changes that occur each day.



Many get burned. If you buy options (puts or calls), rarely will you make a big hit. Most of the time, they will expire worthless. I lost considerably with them



The system I invented for myself works best over time.



I accumulate solid company's stocks, and trade others.



This past week I traded Local.com stock, which doubled in the past week, getting me five free shares.



The stock market looks very strong in the short run, and long term things may change if the interest rates change dramatically.



A lot of what will happen in the world's stock market will be affected by Chairman Bernake's decisions, so I pay close attention whenever he speaks or meets with the Federal Reserve.



I hope my experience was helpful in what you plan to do in the stock market.

Answer 4

Day trading is real investing experience.



The problem is that you'll experience high trading costs (in the form of commissions and markups and markdowns on the stocks you buy and sell), and probably not much in the way of profits. Many day traders experience losses. Short term price movements of stocks are very hard to predict, and Wall Street insiders (like traders at brokerage firms and specialists on the floors of the stock exchanges) can sense price movements before retail investors like you. So they can get the jump on you.



The experience of day trading is real--real painful for most who try it.



If you're new to investing, ease your way in and learn as you go. Start off by focusing on long term investment, such as for retirement. Try mutual funds first. Then, as you learn more, maybe think about dabbling in individual stocks. See the webpages listed below for more info.

Answer 5

Ok first off congratulations on investing, looking for places to put your hard earned capitol to work for you is paramount to building wealth. Now this new found road is not without its perils, and should be treated like any of lifes great journeys.



Preparation, due diligence, and some elbow grease can prepare you to start your journey,



1) Arm yourself with as many tools as you can, Read Read and Read ( did i say read?) Every thing you can in your local libary about investing, fundamental .and technical analysis



A few books to start would be Rich dad Poor dad, Warren buffet and trump's book, and for a understanding of stock technicals and movements read A beginers guide to trading by toni turner.



Ok, maybe after a little reading , now your feeling like you can give this investing idea a shot and now you want to put the principles you learned to work.



2)So what company to invest in, ?

Well first you have to have a plan certain parmeters our goals that ideally you want your investment to provide.



lets say you are looking for a stock that has the potential to go up 100% + and your time frame is 1-3 years. Well from your reading, you remember that generally small - mid caps and growth stocks typically out preform the general market . You also remember that on average the stocks market has given 10% roi. You are shooting for 33% each year over 3 years. So that would be a example of one goal.



You also were watching live earth, and enjoying the music and thinking how you could do your part to help out.

So you were doing some research on alernative energy and green companies on hoovers.com



Maybe another goal, is to invest in a company that not only can make you money, but whos product has the ability to disrupt the market place and is has a socially responisble misison statement or ethos. The point is, your dollar is your vote at the supermarket or in the stock market. Without investors some of the greatest technologic advances of the last century would of never taken place. So just realize your investment is you actively taking part in what the world could be like in the future. ( sorry to ramble, im a better talker then i am writer =], )

As smart guy, you realize that global landscapes are changing and green energy will be the new paradigm of the future and would probably make a good investment.



So you start you research, you get a list of green companies.When you invest, you may be doing it just to make money, but your investment also spurs the world we are born in live in and will die in.



You stumble across a stock called Raser Technologies Inc., because you think hybrid demand will increase and there will be a shift from oil, and efforts to reduce energy consumption accross the board. Since Raser is a relatively new company, that holds many patents, and is just turning the corner from a R&d company into commercialization of its technologies. You think this could be a great company in its infancy and could fit you investment goals.



So now you check various places to find info on the company

you check the website (www.rasertech.com) , the sec filings, and maybe yahoo or msn.com for ratings if applicable and recent news etc......Then you check the stocks technicals, you see that the stock has a strong uptrrend developing and see that historically stock is undervalued and oversold relative to its previous high of 50. You examine its fundamentals, share structure , any revenues cash in the bank.



keep in mind when we invest in potential growth stocks, we are not looking at what has happned in the past but more concerned to what the future holds. Since the the company which was founded in 2002 and up until now has been a research and development company, dont expect it to see many revenues now. Since the company is about to carry out the commericilization of its techs and go online with its geo thermal projects,you are investing for the bright future.



3) finding a broker so you can invest



Now you must choose a broker, i would think a online retail broker would be perfect for you when begining.



etrade.com schwab.com scottrade.com

or a few adequate choices.





4) Now if you think you need more experience, and you dont want to risk your hard earned money yet. You can choose a site like www.clearstation,com and paper trade your investment ideas. This way if you are wrong about your analysis, you can learn without losing real money.



paper trading will allow you to monitor your success, the bad part is if you are right then you dont make any real money paper trading=[





5) Ok here ya go, you are ready to place your first order

few tips always use limit order , market orders put you at the mercy of the market makers and is not reccomended ever!



Another tip always sell on the ask never the bid!







Before you hit that trade button,you have developed your investment plan, contigency plan, and done all your research.



Plan your trade and Allways trade your plan, use the tools you have learned and always try not to invest on emotions>>>>>>



Use research technicals to make investing decisions not emotions.



I hope this is the best answer and you have a long prosperous road as a future investor, its late now so please excuse me for the grammar and spelling errors. If my opinions can be of anymore help feel free to contact me.



goodluck

Source(s):



http://moneycentral.msn.com/investor/hom...

hoovers.com

http://en.wikipedia.org/wiki/investment...

www.stockcharts.com

Answer 6

Because it's not investing, it is trading. Generally an investor will look at the long term prospects for a company and not be concerned with short term moves in a stock, simply will look to acheive long term appreciation in a stock.

Answer 7

Investing involves assessing shares for long term profit growth potential, dayrtading is essentially gambling on short term price movements.



A High proportion of day traders lose money.

Answer 8

particular i've got met those i might evaluate actual friends..a number of which we now telephone sometimes. i think of it is extremely possible to style actual friendships online see you later because of the fact the each and every physique is being hassle-free with one yet another. I met my husband online 12 yrs in the past so i know it is possible.

Answer 9

Because it is exactly that trading, not investing. Not that there's anything wrong with it though.