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6 Answers
- 7 years ago
Day trading is when you sell a stock less than 24 hours after you buy it. Or you can buy a stock less than 24 hours after you short it.
Day trading is considered risky, although it's really not. But you need to trade enough shares that a 1 cent movement will make you more than $10, otherwise commissions will eat you up.Therefore on a $25,000 account a 1 cent move generating $10 means you need to buy and sell at least 1000 shares at a time. And if you have $25,000 then you can only buy stocks that have a share price of $25 or less.
In the US you can't day trade stocks unless you have $25,000 in your account. If you trade more often than 4 times in a rolling 5 days, you get labelled as a "Patterned Day Trader" Which means they will lock your account for up to 90 days.
This is true for every single broker in the US. The Federal reserve make the margin rules and they all have to follow it. If you live outside the US then the laws might be different. Every country has it's own rules.
- 6 years ago
Daytrading is a style of investing. Like all investing it poses risk. However those risks can be mitigated with a stop loss order. Stocks are not the only financial instrument that can be daytraded. Due to the "pattern day trader" rule listed in one of the other answers many people in fact do not trade stocks. The vast majority of daytraders have recently gravitated towards currencies or futures trading (also known as forex and e-mini futures) because of their liquidity and low margin rates. Account can be opened with as little as $500 and commissions are often 1/10 of stock commissions. Also forex and e-minis are short tern investment vehicles by their vary nature so there is no "pattern day trader rule."
Source(s): www.bullbearbias.com - ?Lv 77 years ago
day trading USES the stocks traded on stock markets - you need at least $25,000 to open a day trading acct
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