Glossary
Day Trading
Buying and selling securities within the same trading day, closing all positions before the market closes.
Day trading is opening and closing a position in the same security on the same trading day, so the trader holds nothing overnight. A day trader aims to profit from moves of a few cents to a few percent inside a single session, and accepts that small edges must be repeated many times, after costs, to add up.
How it works
Day traders usually focus on liquid stocks, ETFs, futures or currencies with tight bid-ask spreads, and use short-term charts, often 1- to 15-minute bars, together with volume, Volume-weighted average price (VWAP) and Level 2 quotes quotes. Positions are sized so a single loss is small, and stops are tight.
US rules (as of 2026)
For decades FINRA's pattern day trader rule required a $25,000 minimum in a margin account for anyone making four or more day trades in five business days. FINRA replaced it with an intraday margin standard effective June 4, 2026, which drops the $25,000 minimum and the day-trade count. Firms may phase in the change until October 20, 2027, so some brokers still apply the old rule. The $2,000 minimum equity for a margin account remains. Day trading in a cash account is limited by settled cash rather than by the PDT rule.
The hard part
Studies of retail day traders in several markets have found that most lose money over time once costs are counted. Speed, discipline and risk control matter more than any single setup, and Paper trading is a cheap way to test a plan first.