ACTIVE TRADING DISCUSSED

As I've been learning about Active Trading, I'm also trying to get a grip on the other definitions surrounding this activity. For example, I didn't understand the different between day trading and active trading.

I like these articles I found at investopedia.com. An active trader is looking for the profit potential that he can get out of the market based on temporary trends. In the product we're sell... these are daily trends. The idea is to take profit out of the market each day, or each week.

I love that definition. It puts a great deal of control back into stock trading. The only downside, if you want to call it that, is that you've got to be focussed daily on the markets and know what stock is doing what each day. Thus the meaning of Active Trading. You have to be ACTIVE in trading stocks each day.

DAY TRADING DISCUSSED

According to investopedia.com

An active trader, on the other hand, isn't keen on exposing his or her investments to the effect of short-term losses or missing the opportunity of short-term gains. It's not surprising then, that active traders see an average long-term return not as an insurmountable standard but as a run-of-the-mill expectation. To exceed the standard, or outperform the market, the trader realizes that he or she must look for the profit potential in the market's temporary trends, which means trying to perceive a trend as it begins and predict where it will go in the near future.

Day trading is defined as the buying and selling of a security within a single trading day. This can occur in any marketplace but is most common in the foreign-exchange (forex) market and stock market. Typically, day traders are well educated and well funded. They utilize high amounts of leverage and short-term trading strategies to capitalize on small price movements in highly liquid stocks or currencies. Day traders serve two critical functions in the marketplace - they keep the markets running efficiently via arbitrage and they provide much of the markets' liquidity (especially in the stock market). This article will take an objective look at day trading, who does it and how it is done.

Day trading has more of a feel of foreign exchange (forex) trading and much bigger amounts of money. When they talk about highly leveraged, it's important to trade with a lot of money because the returns are not as great as with stocks.

I was mistakenly using the term day trading for active trading and thought I should clear that up, (for myself anyway).

Thanks to investopedia.com for the articles and definitions.