What do you have to do to be considered a Day Trader?
If I were to buy/sell stocks on a daily basis, then am I a Day Trader? How about if I buy/sell maybe 1-3 stocks one day, then nothing for about a week or two, or buy/sell maybe 2-3 times a week.
In other words, what is exactly considered to be day trading versus a professional trader?
Best Answer
2183 points
ChaosNantuko answered one year ago …
In the legal sense, your considered a day trader if you make 4 "daytrades" in a 5 day time span. Because of the risk typically associated with daytrading, their are laws in place stating that "pattern day traders", the official designation, are required to maintain 25000 in their account if they want to trade, with margin of up to 4:1.
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3963 points
MNSL answered one year ago …
Hi SharonMR
Day traders are those who close trade that day it self. They are not investors. They buy and sell stocks in the same date. These day traders might buy and sell stocks in minutes, but might also hold some overnight or longer.There are traders make money by practicing this method. Some people make use their technical knowledge to do day trading. You can see these day traders almost all types of markets such as commodity market, futures market and option market etc. Many day traders focus primarily on the NASDAQ Stock Exchange. This is a high risk game. It is reported well over 50% of those who try it fail. With my experience I think still long term investment is better than day trading. Professioanl Investors mainly rely on fundamentals to invest in the different types of markets.
I give below following websites for your further reading.
• A speculator who will normally initiate and offset a position within a single trading session.
www.nfa.futures.org/basicnet/glossary.aspx
• ... ... Speculators who take positions in commodities which are then liquidated prior to the close of the same trading day.
www.gftuk.com/forex/glossary.asp
• Is a market participant who has a same-day transaction horizon. Often the positions are held for minutes or hours but they are offset by the end-of-the-market-day.
www.oasismanagement.com/frames/glossary/d.html
&... ... acirc;€¢ When you buy and sell an investment within a very short time, sometimes as short as a few minutes or perhaps a few hours, you're considered a day trader. The strategy is to take advantage of rapid price changes to make money quickly. ...
www.morganstanleyindividual.com/customerservice/dictionary/Default.asp
... ... • Traders who opens and closes option positions or multiple option positions all within the same trading day.
www.optiontradingpedia.com/glossary.htm
• A very active stock trader who buys and sells the same security very quickly, executes a large number of trades each day, and generally closes all positions at the end of each trading day.
www.mytradingsystem.net/Glossary-trading-terms.html
â€&c... ... ent; A trader who establishes and liquidates positions within one day's trading, ending the day with no established position in the market.
www.tradecenterinc.com/commoditysystem/Glossary.html
â€&a... ... mp;cent; A very short term trader who does not hold positions overnight.
www.striplingdata.com/glossary.htm
• Any investor or trader who liquidates all positions prior to the close of that trading session.
www.upthelimitfx.com/Glossary/glossaryA.htm
•... ... A day trader is a trader who buys and sells financial instruments (eg stocks, options, futures, derivatives, currencies) within the same trading day such that all positions will usually be closed before the market close of the trading day. This trading style is called day trading. ...
en.wikipedia.org/wiki/Day trader
4085 points
EthanR answered one year ago …
Sharon, just to add to these good answers above, if you hold your stock positions for a couple of days to a week, that is called "swing trading". Day trading is riskier than long term trading because stocks can rise or fall against the direction of your trade easily within a few hours. I do a lot of day trading, but I try to trade after much of the direction has been exhausted (see my article with ChaosNantuko on shorting in the blog section of tickerhound), and the dominant tendancy is for the trade to begin to go the other way. And I always use indicators and moving averages to try to find the best entry points.
If you want to day trade, do so with money that is separate from your other investments. The one good thing about day trading is that if your stock goes against your trade, you can always hold it longer if you really believe it will come back and become profitable. Just set stop orders at a point where you are comfortable, and never let a small loss turn into a big loss. Good luck!
