Electronic securities day trading is actually a form of banking that can trace its roots back to the Renaissance. In those times, the bankers of Italy would discount banknotes and perform the much-needed function of exchanging currencies. This exchanging of currencies usually involved the issuing of a note of the needed currency that could be drawn against the issuing bank's foreign office. Information back then was hard to get, and the banks that could get advance notice of the exchange rate between the two currencies could make additional returns on currency deals.
Other advances in the concept of organized markets include the successful development of the stock exchanges in the Netherlands, Paris, and London. The markets were not without their flaws however, most notably marked by such events as Holland's Tulip Mania, the South Sea Bubble, and the stock market crash of 1929.
These events have been studied by many, and have resulted in many positive developments in trading on the exchanges. Further events in the evolution of day trading include the birth and proliferation of derivatives and the trading of futures on electronic platforms.
Another recent notable event was the end of the Bretton Woods system of currency pegging by mutual agreement. Its end in the early 1970s brought about an era of floating currencies. These floating currencies were mainly traded by merchant and investment banks until the widespread use of the Internet, which allowed the retail private market participant to day trade in her account.
It is true that day trading securities with a personal computer and the Internet is a relatively new idea. Personal computers are only a few decades old, and the Internet didn't become accessible to most everyone until the mid-to-late 1990s. It also took time for computer programmers to develop software that was sophisticated enough to handle the rigors of day trading in a fast-moving market.
Not only has technology developed to allow the private person to day trade, the brokerage business itself has changed. Gone are the days when the only place you could buy and sell securities was with a full-service broker. These full-service brokers are still around today, but there are even more choices available if you are looking for a no-frills, discount broker in which to do high volume trading. This has also been good for the retail day trader, as transaction costs have come way down, and are now in the range of under $10 per trade for equities at a deep-discount firm to over $100 per trade for equities at one of Wall Street's big full-service firms.
The adoption of a deep-discount firm may relieve the cost burden of frequent trading, but it will deprive you of a much-needed element to your day trading career: information. Information was a key element to the success of the banks of the Italian Renaissance. It was also a key element in the meteoricrise of one of the world's great banking families: the Roths childs. Both banking groups sought out, collected, and used information to enhance the profitability of their endeavors. As you leave the world of the private bank and enter the world of the retail day trader using a deep-discount broker, there is an added need for guidance and information.
This book will give you the guidance and information you will need to successfully begin a career of day trading.