Day Trader

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DEFINITION of 'Day Trader'

A investor who attempts to profit by making rapid trades intraday. A day trader often closes out all trades before the market close and does not hold any open positions overnight. Some day traders use leverage to magnify the returns generated from small stock price movements.

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BREAKING DOWN 'Day Trader'

Day trading is often glamorized as an easy path to riches. However, this is rarely the case. The SEC warns, "Day traders typically suffer severe financial losses in their first months of trading, and many never graduate to profit-making status." Day traders are handicapped by the bid-ask spread, trading commissions and expenses for real-time news feeds and financial analysis packages. These costs require day traders to earn significant trading profits just to break even.

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RELATED FAQS
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    Active management and passive management represent two vastly different approaches to investing. Active investors keep their ... Read Full Answer >>
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    Day traders capture profits from the difference between bid and ask prices by scalping stock. Sensing that a stock is going ... Read Full Answer >>
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    The question of whether to do your own futures trading or opt for a managed account that a professional trades on your behalf ... Read Full Answer >>
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    Unlike traditional investing, trading, or day trading, has a very short-term focus. Analysis may be broken down to days, ... Read Full Answer >>
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    As of Sept 28, 2001, the NASD (now, FINRA) and NYSE amended their definitions of day traders. A new term that they use is ... Read Full Answer >>
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