We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Day Trade?

By Adam Hill
Updated May 16, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A day trade is a stock market transaction in which shares of stock or other securities are bought and resold within the span of one trading day. Stocks, currencies, options, and futures are some of the instruments that can be transacted in a day trade. There are many styles of day trading, especially as it has become more accessible to casual, at-home traders. For example, some day traders may invariably exit all positions before the market closes to avoid any unmanageable risks, while others believe it is acceptable to sometimes stay with a winning position after the markets close for the day.

Originally, all important stock trades in the United States were made at the New York Stock Exchange. Investors would contact brokers, who would relay orders to stock specialists on the floor of the exchange. These specialists would each oversee markets in just a handful of stocks, by arranging a simultaneous purchase and sale of stock and writing up a ticket for the sale. This information would then be transferred to both brokers -- the one who placed a sell order and the one who placed a buy order.

Something akin to this process is still used, but the steps have been dramatically streamlined, and computerized to a great degree. The advent of electronic communication networks (ECNs) for the placing of stock orders has gone a long way to facilitate and speed up the process of trading, as well as making it accessible to more people. The internet and online brokerages have made it so that almost anyone can trade stocks.

Because of the large profits that can be made through trading, many people have become involved in day trading from home in an attempt to make an income this way. The risk inherent in a day trade must be understood by people who engage in trading. For people who run hedge funds or otherwise manage large amounts of money, day trading is a way of life. For individual traders, however, the potential losses can be magnified due to the fact that it is one’s own money that is being risked. Lack of education in traders who are more curious than serious can also have unpleasant results.

In learning how to day trade, it is important for beginners to have a plan, backed up by technical knowledge of the market. Before their first day trade is executed, they must know how they are going to place a trade, what they expect to happen, and how they will then exit their position. A beginner should determine individually how much unexpected loss he will tolerate before exiting a position. Strict adherence to well-founded rules will give a day trader a healthy advantage. The famous investor Warren Buffett, known for his witty observations, said it best: “Like the Lord, the market helps those who help themselves, but unlike the Lord, the market will not forgive those who know not what they do.”

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.