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The practice of buying and selling financial instruments within the same trading day, closing all positions before the market closes.
Day traders attempt to profit from short-term price movements and typically use technical analysis, level 2 quotes, and fast execution platforms. The SEC classifies anyone who executes 4 or more day trades within 5 business days as a "pattern day trader," requiring a minimum account balance of $25,000. Studies consistently show that the vast majority of day traders lose money: a comprehensive study of Taiwanese traders found that over 80% lost money over a 6-month period. Day trading should be approached with caution and a thorough understanding of the risks involved.