Volatile markets, emotions affect day trading

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Active day traders try to make money by seizing profits from the buying or selling of equities that quickly fluctuate, usually within the span of a day.|ret||ret||tab|

Investor skittishness over the U.S. economy, the unsettled issues of foreign policy and the forthrightness of accounting standards has made this already tricky enterprise even more demanding.|ret||ret||tab|

"The thing that's made it difficult for day traders is that the market's been going down more than it has up," said Tom Wyrick, professor of economics at Southwest Missouri State University. |ret||ret||tab|

Larry Tabb, vice president of securities and investments research practice at TowerGroup, a Needham, Mass., research firm, said it's the "semi-professionals," those people who have a background in trading or have gone off on their own who are the ones doing most of the serious day trading right now.|ret||ret||tab|

"Unless you really know what you're doing, it's a very difficult way to make a living," Tabb said.|ret||ret||tab|

"The days of holding a stock and waiting for a price aren't there because the market is in such flux."|ret||ret||tab|

To day trade efficiently will require some tools, Tabb said. He recommended a high-speed computer with access to real-time market data, no less than two monitors, high-powered and sophisticated analytics, market visualization software, and above all, a methodology appropriate for your goals.|ret||ret||tab|

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If conditions are right|ret||ret||tab|

"What day traders like is volatility a quick move in a stock," Wyrick said. "They think they see something that's out of line or they think they know where something's going in just the next few minutes or the next few hours, so they're trying to get in there for the quick kill."|ret||ret||tab|

The premise seems simple enough. Applying a winning strategy, on the other hand, requires some real savvy and a good constitution. |ret||ret||tab|

"I have never known anyone long term that has ever made money buying and selling stocks consistently," said Alan Suiter, president of First Financial Services. |ret||ret||tab|

For emphasis, Suiter referred to one of his 600 accounts, a Joplin client who chucked more than $100,000 while trading his own account.|ret||ret||tab|

People get emotional and lose sight of their objective, Suiter said. They don't do adequate research, or they buy on a whim and don't stick to their own rules, he added. |ret||ret||tab|

"I would never play with more money than you're willing to lose," Suiter said.|ret||ret||tab|

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Knowledge is power|ret||ret||tab|

There's also the matter of information. Suiter said the average investor doesn't have the requisite knowledge to make the best market choices. By the time individual traders get information, it's old news; the largest firms have all made their moves, he said.|ret||ret||tab|

While a reasonably active market affords opportunities for the short-term profits day traders seek, an erratic market makes anticipating changes more complex. |ret||ret||tab|

"It's hard to tell if you have trends if you're all over the place," said Paul Nowak, Ernest R. Breech professor of business administration and economics at Drury University.|ret||ret||tab|

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