What is Day Trading?
Day trading is simply buying and selling stocks on the same trading day. Before the market closes for the trading day, most trading positions are closed.
This is different from after-hours trading where the trading activity continuous even when the regular hours are done and the stock exchange closes.
If you buy and sell stocks during the trading day, then you are a day trader. IF there is a lot of buying and selling done on a single day, they you might be imagining it to be a truly hectic day. In actual practice, this may not be so. You can make several trades a day or you may just make a single trade.
There are some traders who buy stocks today, but if they think that it will not be profitable to sell it on the same trading day, then they sell it of the next day. There are no legal restrictions to finish off your trading activity the same day. You may have to pay some differential on brokerage if you carry your trade to the next day.
When the trading day is ending, most traders close their trading positions. Your trading strategy for the day determines you trading frequency; it may also depend on your general trading style and outlook.
You will find traders who do very short or short-term trading. It only takes them a few minutes of seconds to finish off their trades. These are high volume traders who buy and sell several times a day. Brokers love this kind of volume trading and so the trader is rewarded with big discounts on commissions.
Some people don’t actually want this reduced brokerages. These people are not short term traders since their focus is on momentum or trends of the stock movement. They are patient during their wait for a strong move which may occur during the trading day. These types of day traders make only a few trades.
There are traders who make sure that their stock are sole at the close of the market day since they want to avoid the risk the comes from the price gap between the closing price on the day they bought the stock and its opening price the next day. These people consider this practice as a golden rule which they follow religiously.
Still, other traders believe in allowing the profits to run so they stay with the position even after the market closes.
In day trading, the profits and losses come quickly. Although you might think that day trading is like gambling, there is a marked difference between the two. Day trading involves serious understanding of the process of trading while gambling does not allow you to make calculated moves or intelligent strategies.