Jump to navigation Jump to search This article is about the practice. For the occupation, see Day trader. Please help improve it or discuss these issues on the talk page. This article needs intradia forex converter citations for verification.
The examples and perspective in this article may not represent a worldwide view of the subject. Day trading is speculation in securities, specifically buying and selling financial instruments within the same trading day. Day trading was once an activity that was exclusive to financial firms and professional speculators. Many day traders are bank or investment firm employees working as specialists in equity investment and fund management. Some day traders use an intra-day technique known as scalping that usually has the trader holding a position for a few minutes or even seconds. Most day traders exit positions before the market closes to avoid unmanageable risks—negative price gaps between one day’s close and the next day’s price at the open. Another reason is to maximize day trading buying power.
Other traders believe they should let the profits run, so it is acceptable to stay with a position after the market closes. Day traders sometimes borrow money to trade. Since margin interests are typically only charged on overnight balances, the trader may pay no fees for the margin benefit, though still running the risk of a margin call. The margin interest rate is usually based on the broker’s call. Because of the nature of financial leverage and the rapid returns that are possible, day trading results can range from extremely profitable to extremely unprofitable, and high-risk profile traders can generate either huge percentage returns or huge percentage losses. In addition, brokers usually allow bigger margins for day traders.