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Only a few years ago it was very difficult for the average investor to day trade stocks.  The commission rates, even at discount brokerages, was a bit high to take advantage of small moves in stocks.  But the bigger obstacle was they way trading was regulated by the SEC.  Capital requirements were very high for making a series of trades in a short period of time.  But regulations were changed, allowing traders to have 4 times their equity as intrady buying power.  “Intraday buying power” was not a phrase you would ever hear in a retail brokerage house until recently.  Online brokerages such as Ameritrade have viewed the changes in regulations as an opportunity to provide another category of trading for their clients and have added many features to support day trading activities.

I look at day trading as a way to control risk when trading volitile issues.  The fact that I can get into a stock and back out before the close means I can sleep at night and know that I won’t wake up the next day to find some unexpected news event has sent the stock spiraling downward. 

Day trading is not a strategy that I plan to use that much, but its nice to have the ability to get into and out of positions quickly.  Long term investing in solid companies does make the most sense for a large part of my portfolio, but for that portion of funds I use for speculative trades, I can now take somewhat larger positions than I would for a short term trade of  several weeks, and just follow the trade very closely for the day.   

Ameritrade is only charging about $10 a trade, but I may look into Zecco.com which is advertising about 40 free trades per month.

This entry was posted on Monday, September 10th, 2007 at 3:33 pm and is filed under online trading. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.