Expert: Paul Henneman - 5/2/2007

Question
Hello,

Thanks for your article on day trading, very informative. I've been looking into doing some day trading myself. Have you ever heard of Zacks? If so, what are your thoughts on this firm? I have a money market account, invest at work 10% in 401k but would like to get more into trading. I make to much for the Traditional / Roth IRA -- do you have any suggestions.

Answer
Martesha,
   Thank you for your question! Yes, I am familiar with Zacks and that is a very reputable company, generally good data, and a decent reputation. The main thing I would suggest to you is that it is a statistical fact that most day traders lose money. Some make good money, but it is diffucult and takes a large amount of dedication. The problem is generally transaction costs. Day traders attempt to make a little bit of  gain over a short term, and do that many times over. But each trade costs money to execute, so you generally will find that you have to produce very high returns just to make up for the trading costs. It is possible, but I strongly urge you to take a close look at your estimated trading costs to determine how much profit you have to make to keep up with those costs. You don't really make any money until you pass that.
Another suggestion is to read any of William O'Neill's books. Available in just about any book store or on Amazon.com, he is the founder of Investors Business Daily. His books outline short term trading strategies that have generally worked very well over the years.  I think that would be essential reading for you if you wish to day trade.

I hope that helps, please do no hesitate to follow up with me if I can be of any further service,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com