What Is Day Trading?
Day trading involves entering and exiting positions within a single trading session, never carrying a position overnight. Holding periods range from minutes to hours.
The appeal of day trading is no overnight risk and many opportunities per day. The reality is that the statistical majority of retail day traders lose money — studies consistently put the success rate around 5-15% over multi-year periods. This is because the costs (slippage, fees, time, emotional toll) consistently exceed the edge most retail strategies generate.
In the US, day trading is also subject to the Pattern Day Trader (PDT) rule: accounts under $25,000 are limited to 3 day trades per 5 business days. This regulation exists specifically to prevent undercapitalised traders from blowing up faster.
Related terms
- Scalping — A trading style targeting tiny price movements held for seconds to minutes.
- Swing Trading — Holding positions for days to weeks, capturing multi-day price swings.