What is Day Trading?
Day trading is a trading style where positions are opened and closed within the same trading day, with no positions held overnight to avoid overnight risk and gap risk.
Day Trading Explained
Day traders aim to profit from short-term price movements, often making dozens of trades per day. It requires significant time commitment, fast execution, and strict discipline. Pattern day traders in the US must maintain a minimum $25,000 account balance. The high failure rate is largely due to poor risk management and emotional trading.
Real-World Example
A day trader buys 500 shares of TSLA at 10:15 AM at $245 and sells at 11:30 AM at $248.50, capturing a $1,750 profit. All positions are flat before the market closes at 4 PM.
Related Terms
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