By definition, a “Day Trader” is an individual who carries no open positions overnight but rather has completed all their actions by the end of the trading day.
What Does This Mean?
When you trade stocks, or even commodities or foreign currencies you may often carry your position over for days, weeks and, in some cases of stocks, even for many years.
A day trader does not normally do this. They essentially bank on a single day’s fluctuation in the market to make their profits.
A day trader will but a stock in a company in the morning and if it goes up incrementally during the day they will then sell off their positions at a profit before the trading day closes.
Not all trades are completed by the end of the day in all cases and if they are not they are termed as “Swing Trades”
Becoming a successful day trader means that you will need a good quality computer with at least one large monitor or even several so that you can see a lot of relative information at one time. A solid internet connection is also essential so that you can receive that information in real time as any delay in getting the pertinent information can mean the difference between success and failure.
The ability to purchase large blocks of a stock in order to take advantage of small price changes is the goal of the average day trader so you need to have a somewhat realistic bankroll in order for the trades to be profitable enough to cover all the fee’s you will need to pay to make those trades.
Day trading is not for the faint of heart as it can produce volatile swings depending on the skill of the trader. For some they love the rush of adrenalin that day trading brings.