Day trading is a business.

At least that's how freelance writer and consulting analyst Ann Logue wants people to see it. Logue is the author of ‘Day Trading For Dummies,' and she was recently a guest on Benzinga's #PreMarket Prep to discuss the newest edition of her book.

“(Day trading) is a great way to make a living, but it is most definitely not for everyone,” she said. “And so a big part of my book was helping people figure out which person they are and to have them avoid making really expensive mistakes.”

People do make really expensive mistakes. Ann lives in Chicago and knows a lot of successful traders. Day trading suites them, she said, and they love it. But it's still not for everyone.

Infomercials and pop-up adds can make it seem easy, Logue said, and it can be for some people. If you are going to be successful, she said, you need to think about how you are going to track your performance, manage your risk, and set your limits every day and every trade so that you are going to be around to trade tomorrow.

Big changes over small time periods

The first edition of her book came out in 2008, and the third edition was just released this year. Logue said a lot of things have changed since then.

“Besides the whole turmoil in the financial market, I think the increased presence of the automated trading, and the increased role of dark pools has had a huge effect on what kind of strategies people can use,” she said.

In addition to dark pools, the new edition of Logue's book talks about high frequency trading. Both of those things make it a lot more difficult for independent traders to participate in certain markets, Logue said.

Related Link: TheStreet's David Peltier On Investing In Stocks Under $10, Picking Dividends And Apple

But she still thinks there is a place in the market for real day traders because of changes in regulations that are starting to affect high frequency trading. It may cycle back, she said, because opportunities for the biggest computer traders are diminishing. At the same time, firms are starting to question whether or not having millisecond advantages are really going to make a difference. She thinks both of those might cause a slight normalization in the market.

“I think allowing some time for an idea to play out and looking less for really short-term inefficiencies and more for trends playing out over the course of a day is going to be a better strategy,” she said.

Michael Lewis and rigged markets

The high frequency traders are making it more difficult to trade in the higher price stocks, Logue said, because they are looking for volume. She said that betting on inefficiencies in milliseconds of trading almost starts to take the part of gambling, since it's really hard to figure out if there will be one for such a short term. This is where changes in regulation and dark pools are starting to come into play about whether or not some of those inefficiencies are manufactured, she said.

Logue said she thinks the market is rigged against the little guy.

“I think there is so much day trade based on finding inefficiencies, and it becomes too difficult to find them with the kinds of equipment that most traders have,” she said.

A lot of what Michael Lewis says in his book was not necessarily new to a lot of people, Logue said, and she was surprised that so many people were stunned by what he asserted.

Logue's advice for traders

  • Approach it like a business. Even if you're only trading for an hour, approach it like a part-time job where you have specific hours and limits.
  • Have a system for sizing your trades and setting your limits. “The system you choose may depend on your personality or may depend on the assets that you trade, but having that discipline is the key,” she said.
  • Have a system for evaluating your trades. Whether it's a cheap notebook or online diary, it's important to keep some sort of trading diary to see how you respond to different factors in the market and what types of trades are working for you. “There is a psychological element to this,” she said. “Some people are going to find certain trading systems work better for them than others.”

Check out the full interview here:

Related Articles
  1. Budgeting

    The Honest Company Bundles Review: Are They Worth It?

    Learn more about The Honest Company and its bundle subscription services, which deliver discounted diapers, formula and other baby products to your doorstep.
  2. Products and Investments

    The One Thing Your Portfolio Must Always Have

    Portfolio diversification is essential in any situation, but especially so as the market finally returns to fundamentals.
  3. Budgeting

    Blue Apron Review: Is It Worth It?

    Read about one of the top meal-kit delivery services in the United States, and learn more about what it offers and how much it costs.
  4. Budgeting

    Plated Review, Is It Worth It?

    Take a closer look at the ready-to-cook meal service, Plated, and learn how the company can help you take the hassle out of home cooking.
  5. Investing News

    How China's Economy is Now Like America's

    China's economy could take the global economy down with it; why that might be good news in the grand scheme.
  6. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
  7. Fundamental Analysis

    South Korea - King of Exports

    Read about one the most important and successful exporting countries in the world, and learn more about the types of products it exports.
  8. Investing News

    Volatility Vexed? See What the Experts Are Saying

    Volatile times lead to a diversity of opinions on where the market is headed. Here are takes from five investing luminaries.
  9. Investing Basics

    The January Barometer: Is it Still Relevant?

    The January Barometer has been historically accurate. Will that be the case in 2016?
  10. Investing News

    The 8 Highest Grossing Movies of 2015

    Count down the most popular films at the American box office in 2015, and learn how much they earned in the domestic and worldwide markets.
RELATED FAQS
  1. What is the long-term outlook of the metals and mining sector?

    An industry agency council was established by the World Economic Forum in 2014 to serve as an advisory board on the future ... Read Full Answer >>
  2. What is the railroads sector?

    The railroads sector is comprised of publicly traded stocks for companies that operate railroad tracks and/or trains. Railroad ... Read Full Answer >>
  3. Who are Amgen Inc.'s (AMGN) main competitors?

    Biotech giant Amgen Inc (AMGN) bills itself as one of the first biotechnology firms. It was founded in 1980 and has grown ... Read Full Answer >>
  4. What's the most expensive stock of all time?

    Back in late August 2012, Apple’s (AAPL) stock price reached nearly $700 per share. The stock has since split but has yet ... Read Full Answer >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center