What is Day Trading?
In day trading you buy and sell stocks on the same trading day. Most traders close their trading positions at the end of the trading day.
Day trading is different from after-hours trading in that it is confined to the open hours of the stock exchange; trading that continues after regular hours is after-hours trading.
Day traders are the people who buy and sell during day trading. 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. This may not be so in actual practice. There are traders who make a few trades a day and others even limit themselves to one trade.
You may even just buy a stock on one day and sell it on the next day if you think that it is not profitable to sell it on the same day. You are not really restricted by law 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.
In the usual practice, traders close their trading positions by the end of the same trading day. Your trading frequency will depend entirely on your trading strategy for that particular day, or your general trading style and outlook.
Short term trading is done by some traders. They finish off their trades in a matter of a few minutes or seconds. These traders buy and sell several times a day and their trades consist of high volumes. Brokers reward them with big discounts on commissions because of the huge volume of their trades.
There are others, though, that do not want reduced brokerages. They focus on momentum or trends of the stock movement These traders patiently wait for a strong move which can happen during the trading day. During the trading day, they only make 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. Many follow this practice religiously treating it as their golden rule.
There are also those who stay with the position even after the market closes believing in allowing profits to run.
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.
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