Day Trader

Loading the player...

What is a 'Day Trader'

A day trader is 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.

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.

RELATED TERMS
  1. Overnight Return

    One of the two components of the total daily return generated ...
  2. Intraday Return

    One of the two components of the total daily return generated ...
  3. Position Trader

    A type of stock trader who holds a position for the long term ...
  4. Intraday

    Another way of saying "within the day". Intraday price movements ...
  5. Swing Trading

    A style of trading that attempts to capture gains in a stock ...
  6. Buy Weakness

    A proactive trading strategy in which a trader takes profits ...
Related Articles
  1. Day Traders

    Day traders enter into and exit positions several times per day. The critical feature is that they never hold a position “overnight.”
  2. Professionals

    A Day In The Life Of A Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
  3. Active Trading Fundamentals

    An Introduction To Day Trading

    This article will take an objective look at day trading, who does it and how it is done.
  4. Options & Futures

    Introduction - Day Traders

    In this tutorial, we will examine the very short-term trading style known as day trading. In particular, we will show how the trader can create a winning combination by using particular strategies ...
  5. Forex Education

    How Much Trading Capital Do Forex Traders Need?

    Even a small pip profit can mean substantial percentage returns over time.
  6. Trading Strategies

    Pros & Cons Of Day Trading Vs Swing Trading

    Day trading involves making dozens of trades in a single day, based on technical analysis and sophisticated charting systems. Swing trading is based on identifying swings in stocks, commodities, ...
  7. Intra-Day Traders

    The name “intra-day trader” refers to a stock trader who opens and closes a position in a security in the same trading day. This can be buying and selling to capitalize on a potential ...
  8. Pattern Day Traders

    If a day trader makes four or more day trades in a rolling five business day period, the account will be labeled immediately as a pattern day trade account. Certain limitations will then be applied ...
  9. Trading Systems & Software

    Average Rate Of Return For Day Traders

    A look into the question of day trader earnings and factors that play a role in trading success.
  10. Forex Education

    What Type Of Forex Trader Are You?

    Timing may be the key to uncovering your true strength as a forex trader.
RELATED FAQS
  1. What is the best time of the day to trade?

    Unlike traditional investing, trading, or day trading, has a very short-term focus. Analysis may be broken down to days, ... Read Answer >>
  2. What is the difference between investing and trading?

    Investing and trading are two very different methods of attempting to profit in the financial markets. The goal of investing ... Read Answer >>
  3. What qualifies a person as a day trader?

    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 Answer >>
  4. What is the difference between extensive margin and intensive margin in economics?

    Find out why it is important for traders to understand the difference between initial margin requirements and maintenance ... Read Answer >>
  5. How effective is creating trade entries when using Outside Days?

    Learn how outside days provide traders with an opportunity to enter a market with a limited risk level and the opportunity ... Read Answer >>
  6. What are some ways to reduce downside risk when holding a long position?

    Learn about the various methods a trader can use to minimize risk of loss or protect a portion of profits in an existing ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center