What is Day Trading ?

What is a Day Trader?

What is day trading? It is active trading at it's finest. It is the buying and selling of stocks, ETF's, bonds, futures, options, commodities, currencies or any other financial instrument within one day's trading session.

Trades can last seconds or one trade can last the entire session. One day trader might make only one trade per day and another trader might make a hundred trades.

But all day trades have one thing in common.

All positions traded during the day, by definition, are closed by the end of the trading session. No positions are left open over night.

What are day traders? Active traders that trade with no open positions over night are called day traders and sometimes intra day traders. One major advantage that day traders have over swing or position traders (traders that hold positions from days to months) is not being at risk for large overnight price movements or gaps that could be against your position.

This is at least the case with stocks and ETF's. You can sleep easy knowing that your account is all in cash.

So for me, the the answer to the question "What is day trading?", always came down to......it being a type of trading that enabled me to know exactly where I stood at the end of the day. Good or bad.

The score card is right there in front of you, on your screen, all day long. If you're into numbers, a good trading platform will slice, dice and chart all the important figures (%win, net profit, etc.) any way you like it. Unlike working for someone else, you'll know exactly how well you're doing 100% of the time.

And the best part about day trading?

If you have a bad day -- you can get right back into your office the next morning with a clean slate and a fresh state of mind, because it's a brand new day.

For any of my readers that are just starting out and totally green to day trading, here's a chart that gives you an idea of the possible duration of a day trade.

This is a 10 minute candlestick bar chart. This example trade was entered on the 10:00am bar and exited on the 1:00pm bar, lasting about 3 hours.

Stock chart example of day trading


Now you know the answer to the question, what is day trading. Simple right?

Simple, but certainly not easy. It doesn't take a whole lot of effort or knowledge to push a mouse button to buy and sell stocks or other trading instruments, but to do it consistently well enough to keep a trading account going up instead of going down is a whole different story.


IS DAY TRADING A GOOD JOB OR BUSINESS?

Advantages:

  • No Boss
  • No Irritating Co-Workers

  • No Employees To Give You Trouble

  • No Ridiculous Office Politics
  • No Transporation Costs Or Sitting In Traffic
  • Extremely Low Business Expenses
  • Comfortable Working Clothes
  • Working From Home Is Fantastic
  • Time Off And Vacations At Your Will
  • Only You Can Limit Your Income



Disadvantages:

  • Working Alone - Good For Some, Bad For Others.
  • Like Other Businesses, Most Fail
  • No Paycheck When You Don't Work
  • Negative Paycheck If You Under-Perform
  • No Medical Insurance, Company 401(k) OR Pension
  • Mood Swings Caused By 'Bad Days'
  • People Often Associate Day Trading With Gambling
  • Possibly Cutting Ties To Future Career Path