The SEC has expressed many concerns regarding the explosive growth of on-line day trading, and we will address their concerns in this first installment of the course. We will explain why day trading is potentially a valid and rewarding business, but at the same time, we will make you acutely aware of the various hurdles you must overcome to succeed.

Successful day traders must maintain a proper psychology, mental attitude, and focus. In addition, you must work with superior technology, have sound money management strategies, and develop a thorough knowledge of the markets. Of most importance, you must understand the risks involved in trading stocks. I realize that this information may be dry, but it is essential that you have this base of understanding before proceeding.

The professional day trader is a person who trades stocks in the office of a registered broker dealer. With the right amount of training, experience and communications, some of these traders will eventually trade remote from their homes.

Registered broker dealer firms provide the direct access communications (T–1 lines) and electronic execution equipment/software that puts these traders the same execution access level as the Merrill Lynch’s and Goldman Sachs’s of the world. The software used for execution and monitoring the markets is often far more advanced than what I’ve seen or used on major brokerage firms trading desks. Day traders that work in this situation can compete on an execution basis with the NASD market makers and other electronic systems or ECN’s.