Financial Markets Book Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
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by Robert Hashemian

Page 259

For example, they can view individual ask and bid prices and the number of shares offered by the various NASDAQ market makers and other individuals using this system, and they can also participate by placing their own quotes (acting as a quasi-market makers themselves). This service thus allows daytraders to sometimes save on the 1/8 or 1/4 point margins which the market makers may charge on a particular stock trade. Of course gaining access to level II quotes comes with a price, either in fees or a minimum required number of trades per period. There is also a NASDAQ level III service that is only available to market makers to place their own asks and bids for securities they are registered for. Many discount and deep discount brokers also make level II quotes available to their active customers.

Be forewarned, daytrading is a very stressful and exhausting work, and studies show that 7 out of 10 daytraders are not successful at it. My intention here is not to disparage daytrading. Obviously 3 out of 10 daytraders do fine. But for average investors, daytrading is too extreme. It could quickly turn into an addiction (not unlike gambling) and ruin one's financial as well as social and family life if uncontrolled. My approach? Split the difference between long-term investing and daytrading by perhaps engaging in medium-term investing in growth stocks. An even better approach would be a combination strategy. First set aside a certain amount of money for your long-term investing. With that out of the way, use the rest of your investment capital to engage in riskier investments. This way, even if you lose all your risk capital, you might still have something to show for your investments (perhaps your retirement fund).

Buy Low, Sell High

How many times have you heard the title of this section? It is perhaps the single best advice one could receive. If only we could see the future.


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