day trader

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Day Trader

An investor who makes many trades throughout a trading day, buying and selling securities in order to profit from short-term changes in prices. For example, a day trader may buy Stock A at $15 per share because he/she believes it will be $25 a few minutes or hours later. The activities in which day traders engage are high risk because there is no guarantee that the price will move in the desired direction. However, day traders provide a great deal of liquidity to the market.

day trader

A speculator who buys and sells securities on the basis of small short-term price movements. Day traders are thought to add a measure of liquidity to the market.

Day trader.



The risk is that as a day trader you can lose substantial amounts of money since no one can predict how or when prices will change. That risk is compounded by the fact that technology does not always keep pace with investors' orders, so if you authorize a sell at one price, the price it's actually executed at may be higher or lower, wiping out potential profit.

In addition, you pay transaction costs on each buy and sell order. Your gains must be large enough to offset those costs if you're going to come out ahead.

References in periodicals archive ?
Daytraders try to capitalise on price shifts of a few pennies but in sufficiently high volumes so that each trade can be profitable.
In order to make substantial profits, daytraders have to execute many trades.
The other daytrader is a different beast altogether.
Failed daytrader Mark Barton lost more than pounds 50,000 before killing his wife and two children.
One daytrader at the City centre said: "You have to learn to set yourself guidelines for what you are prepared to lose, as well as target that you want to make.
Since the potential for a runaway run-up is slim to none, daytraders and flippers have little incentive to join in; i.e., only loyal investors who believe in the company's mission need apply.
Daytraders thrive on volatility, and the difference between profit and loss can be a moment of hesitation during active periods of a stock's trading.
The popularity of the two investment techniques can drive individual stocks up or down by the sheer volume of daytraders handling it.
They object to the daytraders' tendency to ignore the indicators and analyses that traditionally have controlled investment decisions.
Northern has seen a bear market, something most daytraders have only heard about, and it makes a difference in how he views the market.
He sometimes holds stocks for several days, an unthinkable thing for most daytraders.
And, Northern doesn't suffer the stress that plagues most daytraders. He works from his home on a 10-acre horse ranch near Benton where he breeds quarter horses.