what is day trading

Day trading is a form of speculation in securities where a trader buys and sells a financial instrument within the same trading day, so that all positions are closed before the market closes for the day. The goal of day trading is to profit from the rapid fluctuations in prices that occur during a trading session. Day trading is most common in the stock markets and on the foreign exchange (forex) where currencies are traded. Day traders employ a wide variety of techniques and strategies to capitalize on perceived market inefficiencies, often informed by technical analysis of price movements. Day trading may require fast trade execution, sometimes as fast as milliseconds in scalping, therefore direct-access day trading software is often needed. Day trading was once an activity that was exclusive to financial firms and professional speculators, but with the rise of low-cost online brokerage platforms, the tools for day trading have become easily accessible to everyone. However, day trading is a complicated and risky form of investing that requires meticulous market and news monitoring, is fast moving, and involves a large amount of speculation. It is not for the faint of heart as it involves minute-to-minute decision-making, as well as leveraged investment strategies that can lead to substantial losses. Day trading generally isn’t appropriate for someone of limited resources, limited investment or trading experience, or low risk tolerance.