The practice of Day Trading refers to buying and selling financial goods on or within the same trading day and before the market closes. These financial goods include stocks, stock options and currency as well as a variety of futures contracts.
This method of trading requires a level head and nerves of steel and is best left the fraternity of financial firms and professional investors. In fact many day traders are themselves employees of investment companies or banks, but it is becoming more and more popular with the home trader due to electronic trading.
Day trading can either be extremely profitable or extremely unprofitable. High risk traders are able to generate a huge percentage returns or high percentage losses and many day traders earn millions from their craft each year.
Day traders have been called bandits or gamblers by other less risky investors, but those that are good at their trade are able to make a very consistent and very profitable income from it. Yet, that should not diminish the risk involved especially if a trader dabbles in a losers system or if they lack discipline and ignore their own advice, tactics and rules. They may also have inadequate risk capital which encourages excess stress or they may just be incompetent in managing their money.
Day trading has the ability to make or lose money in a very short period of time, but often relies on using borrowed funds making this a trade that entails quick thinking and fast action. A day trader cannot step away from the mark, they have to be fully present during trade in order to control and minimise any potential losses.