Have you ever awoken in the morning, turned on the financial news and noticed that the market was up, only to see it turn completely around by the time you were out of the shower? Daily stock market movements can happen that quickly these days and if you do not watch out, you will get in trouble.
In the past, in the days before online trading, daily stock market movements were not quite so quick or dramatic. It just was not possible for the stock market to move rapidly with so many fewer trades than there are now. Yes, there were days when it tanked, and days when everyone made money, but for the most part, there were not days when it would swing 100 points in the morning and 100 points in the other direction the same afternoon.
Daily stock market movements are, of course, a double-edged sword. On one side, large swings make it easy to make money. The larger swing, the larger the spread, and the quicker you can make a killing. You do not have to hold your stocks for years anymore – a few hours or even a few minutes may make you an year's salary if you play it the right way.
On the other hand, however, if you are caught on the wrong side of a daily stock market swing, you could be in serious trouble. This past year, when the market dropped, a lot of people went long the next day, assuming it would go back up, even just a little. Well, it did not and they lost their bet. When the market started to rebound this summer, people thought it could not last and they bet against it continuing to rise – and they lost, too.
But, the good news is that if you know what you are doing and have the right tools and knowledge at hand, you should be able to make these movements work for you. Day traders love volatility and they love markets with huge volume, and that is what we have right now. There are a lot of traders, just like you, pumping money back into the market and forcing it to swing like a pendulum. Your job is simply to make sure you buy and sell everything you are holding at exactly the right time. I know – it is easier said than done.
One way to figure out exactly what you are doing and to stop making guesses is to get the proper training that you deserve. In no other job would you just set up shop and start working one day without knowing how to do it or where to go for advice, yet day traders do that all the time. They watch a little CNBC, read the Wall Street Journal, and think they are smarter than the market. Well, guess what? They are not! The daily stock market is a crazy beast and if you do not have the right tools, the right techniques, and the right know-how, you will never tame her!