Day Trading Explained: A Beginner's Guide to Short-Term Stock Trading

Day trading is a type of trading in which a security is only held for a short amount of time. Traders will buy a stock and then sell it again within the same day instead of holding it for the long-term. This type of trader looks to take advantage of short-term fluctuations in the price of a security.

Requirements

If you are day trading stock, you will have to meet the requirements that are set forth by the SEC. According to their rules, you have to have at least $25,000 in your account to engage in day trading. You also have to trade with a margin account from the broker. 

Returns

This type of trading has been known to produce substantial returns for investors within a very short period of time. At the same time, it has also been known to create large losses for traders. This type of trading is very volatile and is not for those that are risk averse. 

Analysis

Day traders utilize technical analysis in order to try to find profitable trading opportunities. These individuals look at stock charts on a computer in order to try to find a pattern in the prices of the securities.