Day trading is an investment trading practice that involves buying and selling securities within a single trading day. Traders engage in day trading using a mix of techniques and strategies to take advantage of market inefficiencies.
In general, day traders analyze the market trends to spot short-term patterns or trade signals that could suggest the next potential price movement. In contrast to investors, day traders execute their moves quickly and almost never hold assets overnight when the markets are closed.
In some cases, day traders try to leverage important economic events and company earnings reports to trade price swings if the corporate earnings top or fail to meet analysts’ expectations.
There are different types of day trading including short-term trading where traders buy and hold assets for just a couple of minutes or seconds, and long-term trading where they hold the asset throughout a single trading day and sell them before the session ends.
Day trading is considered risky, particularly for those who are new to trading. The majority of day traders have been professionally trained and have had a great amount of practice before they started trading. This is because careless and inexperienced investors can lose huge amounts of money in a matter of seconds with a single bad trade.
Go back to our full glossary.