|
Frequently
Asked Questions
What is daytrading?
| |
Daytrading
is a very short-term trading strategy. Daytraders usually buy
and sell stocks within the same day and rarely hold positions
overnight. Daytraders take advantage of small price oscillations
during the trading day. Daytrading has become very popular since
the Nasdaq implemented the Order Execution Rules. Along with
the Internet revolution daytraders have direct access to the
markets via standard Internet lines. They use sophisticated
software programs offered by stock brokers to receive real-time
data and execute orders within seconds. |
How much money do I need?
What kind of knowledge do I need?
| |
daytradeaustria.com
provides everything you need: online classes, a comprehensive
reference book, a free course, and seminars. By using our free
trading platform demos you can improve your skills without risking
your money. |
Where can I try out daytrading without risk?
Which hardware do I need?
| |
Recommended
minimum requirement:
Windows 98, 2000 or XP
Pentium III, 256 MB RAM
17" monitor or bigger
broadband-line for Internet connection |
How long does it take to open an account?
| |
The
whole procedure takes about two to three weeks. |
Will I have to pay taxes in the USA as a non-US citizen?
| |
No,
but you are obliged to pay taxes in the country where you are
located. As a non-US citizen, you will sign the "W8" form to
be exempted from US taxes. |
What is the difference between a web based broker and a direct
access broker?
| |
With
a direct access broker like daytradeaustria.com,
you have direct access to the markets. Order execution goes
much faster and is also much more reliable. Our software offers
many more functions and everything is updated in real-time. |
Can I trade from my home or my office?
| |
Yes!
All you need is a computer and an Internet connection.
|
What is Level II?
| |
With
a Level II screen you can see the market depth. You can see
almost all market participants that are willing to buy and sell
a particular stock with price and share size information. Level
II is a very important tool for a daytrader. Read more about
this topic in our book The Complete
Guide to Daytrading |
What is a Market Maker?
| |
Market
makers serve as intermediary between buyers and sellers. They
buy the stock at the Bid and sell them at the Ask. Each market
maker is assigned to a unique identifier composed of four alpha
characters. If you open a market maker Box (Level II) you can
only see the identifiers. So, if you open a Level II window
for the stock Intel (symbol INTC) and you see GSCO at he Bid
with 1,000 shares (10) you know that Goldman Sachs (GSCO) is
willing to buy 1,000 shares of Intel Corp. Read more about this
topic in our book The Complete
Guide to Daytrading |
What is an ECN?
| |
Electronic
Communication Networks are private trading networks. ECNs match
limit orders and, unlike market makers, do not take advantage
of a spread. Traders can execute trades without the help of
a market maker by using ECNs and by buying at the Bid or by
selling at the Ask, for instance. ECNs are very important for
a daytrader as far as order executions are concerned. Make sure
that you know them well! There are numerous ECNs. Each ECN is
different, has advantages and disadvantages. Read more about
this topic in our book The Complete
Guide to Daytrading |
What is a Margin Account?
| |
A
normal broker account is a cash account. This means you have
to pay full for all purchases on your account. If you pay in
$50,000 you can buy stocks for $50,000. With a margin account
you may be allowed to buy stocks for $100,000 depending on the
rules and conditions. If you apply for a margin account you
must sign a margin account agreement. This agreement includes
all the rules and conditions on how the margin may be used.
Margin just gives you more money than you actually have in your
account. |
What is "Short Selling?"
| |
Shorting
a stock means selling shares of a stock you don’t own. You are
selling the stock with the intention to buy it back later. This
way you can make profits when a stock is dropping. However,
you can’t short all stocks but only those which the broker has
in his short list. There are some other important rules about
shorting but the bottom line is that shorting usually isn’t
as easy as going long in a stock. |
Is my money safe?
| |
Yes!
The US Securities Investor Protection Corporation (SIPC) insures
shareholders in cases of bankruptcy of brokers. All NASD members
must have SIPC insurance which insures an individual investor
for $100,000 cash and $500,000 in securities. Just make sure
your broker is a member of SIPC |
Terms
| |
Bear
Market, bearish: Markets are very weak
Best
Ask (Offer): The best price to buy a stock
Best
Bid: The best price to sell a stock
Block:
A transaction of 10,000 shares or more.
Broker:
An individual or a firm that charges a fee or commission
for executing buy- and sell-orders submitted by another
individual or firm.
Bull
Market, bullish: Markets going up strong.
Chat
Room: With a chat software people can exchange information
in real-time over the Internet. In a chat room all people
can get the information at the same time.
Crossed
Market: The Bid is greater than the Ask
ECN: Electronic Communication Network. Privately owned
trading networks.
Futures:
Contracts about buying something in the future at a price
agreed upon in advance.
Going
Long: Buying a stock with the intention later to sell
it at a higher price
Going
Short: Selling a stock that you don't own with the intention
to buy it back later at a lower price.
Halt
(Trading Halt): When a stock is halted trading is temporarily
suspended. A halt may last for a few minutes up to several
hours and shall give investors time to judge a special situation,
important news, for example.
Inside
Market: The best Bid price to buy a stock and the best
Ask price to sell a stock.
Inside
Spread: price difference between the best Bid and Ask,
inside market
IPO:
Initial Public Offering. A new stock.
Level
I: Level I only shows the inside Bid and Ask price without
share size and the price of the last reported trade.
Level
II: A Level II window shows the Bid and Ask Price of
all market makers and ECNs with share size
Limit
Order: An order to buy/sell a stock at a certain price.
Live
Order: An order waiting to be filled.
Locked
Market: Bid=Ask
Market
Depth: The market depth refers to the total numbers
of buyers and sellers in a stock as shown in a Level II
window
Market
Maker: A registered NASD member serving as intermediary
between buyers and sellers.
Market
Order: An order to buy/sell a stock at the best displayed
price. If the price changes and the order is still live
the order will fill at the changed price.
mIRC:
mIRC is the name of a chat software
NASD:
The National Association of Securities Dealers, Inc. The
NASD is operating the NASDAQ
NASDAQ:
The National Association of Securities Dealers Automated
Quotations System, an electronic stock exchange
Odd
lot: Number of shares not matching a regular trading
unit
Open
Order: An order to buy or sell a stock that is valid
until it is either executed or canceled.
Pace:
Ticks per minute. Shows how many trades are made per minute
in a particular stock. High pace means many trades per minute.
Pace is another form of measuring liquidity and interest
in a stock.
Partial
(fill): The order is only filled with a part of the
share size originally wanted. The order may stay live until
all shares are filled or may be rejected, depending on the
way how the order has been delivered.
Pending
Order: Undelivered order that is good until it is either
canceled or filled
Quote:
Highest Bid and lowest Ask.
SEC:
Securities and Exchange Commission.
SelectNet:
Electronic communication network for market makers.
SOES:
The Small Order Execution System of the NASDAQ.
Spread:
The difference between Bid and Ask price.
Time
& Sales: Reports time, price and share size of executed
trades in a particular stock.
Volatility:
The rate of change in the price of a stock or index over
a given period of time
Volume:
Total number of shares traded for the day in a stock or
a market
|
|
