Can you all please advice on this subject. Could you please tell or shed some light on how to become a day trader. What to do, who to register with and how to go about it. Thanks

jwsman, it is up to the taxman how to view your earnings, but he will generally only view them as income if trading constitutes your main income. Generally speaking it will probably be better for you to wait for the taxman to query your tax forms based on CGT.

Don't try and understand or make logic from this very odd way of making a living. When they go up they go up. when you think shares are all rising too laye. Hit the market now don't wait. Shares are going up when none are bought???. Take little profit often. Buy on rumour sell on results. ANy further info from a 4 year experienced trader. I lost 15k in 1999. So I should know.

I agree Jon - you can make to much of it. When they go up - be glad. When they go down sell. I usually buy on good results or contract wins which almost always make the share value go up. When you've bought a loser - cut it loose. Watch out for profit taking dips which can interupt the overall upward trend of a sucessful share.
As for day trading my advice would be forget it. The bid spread, trading costs and stamp duty make it very hard to turn a profit on anything but high % swings. It works better in the US because they don't have stamp duty - but here we do. You've normally got to get an uplift of at least 3% to just break even. Also day trading means being glued to the screen all day and thats bad for your eyes and your life in general. You've gotta ask yourself - do you really want a job which involves being stuck in front of a monitor every day from 08.30 to 16.30 stuck alone in your office in the spare room at home???? Common - there's more to life........

Haven't checked this thread for a while and although Kayak is correct, that if you do not have any other income then you could find being a day trader being considered your main income. I do know someone who gave up his job to become a day trader and notified the tax office that he was now self-employed, made lots of money in the first year, and then lost in the following two years, and is now reclaiming tax back against the first years profits.

But then if you are making losses - and have other taxable income then you can put these losses against it and reduce the tax you pay. Although the Inland Revenue does not like this as long as you can satify them that you worked really hard at it and was trying to make a profit they cannot refuse to accept it.

But it is not a good idea to wait for the taxman to query your tax forms, because if he does it will cost you a lot of money and you could find you have to pay additional fines & interest and fees if you need help. And then of course there is the automatic 100 fine, for not registering as self-employed within the first 3 months of starting.

Dead Cat Bounce - great piece of writing (post #17)

I started years ago with long(ish) term share-buys, and made all the usual mistakes - getting too attached to some shares and getting shaken out of some at precisely the wrong time. I never felt too hyped up about it, but still experienced that horrible sick feeling on days when everything went wrong. Fortunately most of that happened in a long-term bull market, so I managed to scrape myself off the floor and keep going. Also, my trades at that time were relatively small, so no great loss. (Seemed it at the time, but not in retrospect.) Gradually moved to medium-long term swing trades, and took more of an interest in TA, feeling far less emotional about it all. Once you've experienced a few big losses (or 'lost' some big gains) then you feel far more prepared for the same thing happening again - even if it doesn't. You know not to have all your eggs in one basket, and to retain sufficient cash as an escape route.

More recently I've traded over short-medium term periods (still long by day-trading standards) and, like you, find that it suits my temperament. I like to mull over different shares, TA patterns, etc, leading up to a purchase, but then try to optimise my entry and exit points (using TA) for maximum effect. Using EMAs, RSI, and MACD, over relatively long periods makes this (entry/exit) far less critical than the timing needed for day-trading. I don't set targets, (or if I do I do so very loosely) but generally just look for the turn.

Having said all this, I've been thinking of supplementing my long/medium/short-term trades with day-trading (or, more likely, short-term multi-day swing trades) at some time. At present it's not possible, because I work part-time on various contracts, but I'm planning to gradually phase these out over the next year and devote some time to trading. I've avoided day-trading in the past, thinking that, like you, it might not suit my temperament. In the past I'm sure I could have got addicted to it all, sitting in front of a screen with sweaty palms watching every movement. I didn't think it was for me.

What was interesting in your article was that despite reading all the TA and other books, despite going on training courses, and despite teaching yourself so much about the subject, you still couldn't overcome the traits in your personality that prevented you from making rational decisions, or at least 'good trading decisions', rational or otherwise, over the very short term.

It made salutary reading, because at the moment I'm convincing myself, perhaps wrongly, that I do have the right experience and attributes to make a success of it all. I've accumulated information from the boards about the spreadbetting companies (crooks or not), the CFD merchants (GNI etc) and the recent talk about futures and e-minis with companies like IRD and IB. I've tried to get a feel for the various data-feeds and software, like SSRT, Updata, and eSignal, and the usefulness or otherwise of L2. (L2 probably not for me, initially, as no immediate interest in auctions, bot-watching, etc. Maybe later.) I think I could keep my money management under control (famous last words), keeping track of my trades and accounts, and staying well within margin, although I suspect that this over the short term could prove to be the hardest thing of all.

I do have years, many years, of experience in working with and producing graphs which are very similar to the ones used in TA, using computing and stats, so I think I have some feel for TA graphs. Ironically I always keep my graphs simple, believing that too much data is more likely to confuse, although sometimes useful to draw on if required.

The question is - could I handle short-term trading psychologically? I hope so. I don't get the buzz that I once got in my early days buying/selling shares, avidly watching the trades go through and so on. In fact I now feel relatively indifferent, though not too much so I hope. I would hope to be able to fit it in around my other activities, trading over a few days when I have the time, but otherwise just letting go with no positions open. I feel quite happy nowadays if I miss a 'good' opportunity - there's always another time - but how this attitude would translate into 'real' day-trading, with that additional short-term pressure, is something as yet unknown.

As you say, it's all psychological, and what we can cope with easily over the medium or long term might not be the same as our behaviour under a slightly different set of circumstances. Sometime next year, I would guess, I'll get the chance to find out. In the mean time it's preparation, preparation, and preparation.

Cheers,

StonyB

Hi Everyone, I'm new to all this and I have found this thread both interesting and honest. Dead Cat Bounce mentioned a right and wrong
time of day to trade. Would someone please explain this to me.

Chrissie, I must admit I would be interested to know the right and wrong time of day to trade explanation.

I may have been trading for the last 20+ years, but most of what I've learn't has been the hard way - or since this site started up!!!

Personally I don't trade when the market opens. That's because the spreads are too large. Some spreads narrow quickly others take longer, so I do most of my trades usually in the hour & a half, starting about 30 min after the market opens. I try not to trade after that, but will occassionally trade in the last 30 min the market is open.

I also use limit orders a lot. This way I don't have to watch the market, and try and pick the best time to trade. I set them to buy or sell at a price I am happy with. I always do 4 times the number of buy trades that I want, because I lot of them will not go through. But if they do, then I buy at the price I want. Sell limit orders are based on the profit I am looking to make. Again, they go through if the price reachs my price!