Day Trading: A Little Bit Of History - By: Art Gib

Day trading is basically just what it sounds like: the practice of buying and selling financial items within one trading day. The most common instruments that are used in this kind of transaction include currencies, stocks, and options. Futures are also a popular speculation, with commodity, index, and equity investments being traded.

Day trading is not for everyone. The risks are high, but so are the potential earnings. With the advent of the internet, more amateurs are getting into the game, but it used to mainly be the province of stockbrokers and certain types of specialists on the floor of the New York Stock Exchange.

Did you know day traders have been around since the advent of the telegraph? The key to successful trading is the ability to have up to date communication on a daily basis. The telegraph allowed investors to get price quotes in a timely manner, and bets could easily be placed on stock or commodity prices.

One big difference between then and now is that traders of the olden days were betting against each other as to what the price would do rather than purchasing the product itself. Needless to say, this type of trading was vulnerable to all kinds of corruption at all levels and there were absolutely no protections in place.

The system of trading was fundamentally changed during the second third of the 20th century, thank goodness, making the business honest and legitimate. The invention of ticker tape allowed a continuous flow of information about price fluctuations to be viewed all day long. The new system required the use of brokers to make trade for customers, and the cost of commissions cut into any profits. Investors also were forced to depend on the reliability of their particular broker rather than on their own abilities.

In the 1970's, the rules were changed allowing brokerages to compete for customers by decreasing commission rates, and the number of day traders exploded due to the new affordability of the practice. However, trading was still being done exclusively through brokers.

The accessibility of the internet gave small traders a direct line to trading and changed the face of this kind of speculating forever. Today, thousands of regular folks are learning the rules of day trading and giving it a try. Due to volatility and the risks inherent in this kind of system, however, it is wise to consult a professional and learn how to do it properly.

About the Author

For great stock tips to help you invest wisely, contact the professionals at Blue Chip Stock Trader (http://bluechipstocktrader.com/). Art Gib is a freelance writer.

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