Day Trading Stocks: Trading Markets That Have The Odds Stacked Against You

There is a wide variety of markets available for online day trading

, with some being riskier than others. Knowing which markets have the odds stacked against you can significantly affect your success in online day trading stocks. Here are some important benefits of e-minis (index or basket of stocks) and how they stop the odds from being stacked against you.

First things first, the primary benefit of trading an index or basket of stocks (like the e-minis) rather than an individual stock is that it's much easier to know which way an index or the overall market will go rather than an individual stock. Most stocks are not tightly correlated to the movement of the overall market. If you think the overall market will rise, your e-mini position will most likely rise with the overall market. But there is no guarantee that an individual stock will rise. In fact, on good market days, up to 50% of individual stocks won't rise at all!

Next, if you have ever traded stocks, you know what happens after negative news has been announced in the media. After significantly bad news comes out, stocks can open at half their previous day's closing price or even worse. This is a horrible experience for anyone when it occurs. Yes, e-minis gap higher or lower, but they're not even close to the level of an individual stock. They have never gapped down the extent that individual stocks do, and most importantly, if you are online day trading wisely, this will most likely never happen to you anyway, because you will never be holding any positions overnight!

Another benefit of trading e-minis is they have no market makers. In stocks there is a lot of market manipulation from market makers -- a problem you don't have to deal with in e-mini trading. An example of this in day trading stocks would be when a brokerage firm increases their recommendations or when extremely good news comes out and your stock falls. One reason why this happens is because there are specialists or market makers involved in every stock, and with this comes the possibility of manipulation.

You may see exactly the same trading setup in several stocks, but they can all react differently because of the way the specialist or market maker manipulates the stock. E-minis really level the playing field and make every trader equal. It's first in/first out; if you have a better bid or offer, yours will be completed. You are essentially in a queue and are price matched, so it's completely transparent.

By trading e-minis you can ensure that the odds aren't stacked against you in the volatile online day trading world. Try trading an index or basket of stocks and see how it can help you become financially independent via online day trading.

by: Sarah Simmons

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