investing guide

How Does Day Trading Work

day trading

So how does day trading work?

The actual definition of a "pattern" day trader is someone who buys and sells the same stock in the same business day 4 or more times in 5 consecutive business days.

Once in awhile you will execute a day trade just because you either get stopped out of a stock or you stumble across a huge gain. That is fine as long as you do not do it more than 3 times in any given 5 business days.

Learn about the Securities and Exchange Commission's rules and regulations in regards to Day Trading.

The point of day trading is to basically grab quick upswings in a stock and then grab the profits and turn them back into cash before the day ends. If penny stock investing is a junior level course then day trading is a senior level course that most seniors will fail.

First of all, to be a true day trader you have to keep a minimum balance of at least $25,000 dollars in your brokerage account. This probably eliminates most of you already no offense.

Secondly, unless you can sit at your computer all day monitoring stocks from open to close you will lose the day trading game. Day trading is a professional investors game not a basic investors game. If you are interested in trading stocks in a more active manner it is better to learn the art of swing trading stocks.