Glossary · Defined term
Day trading
Day trading means opening and closing positions within the same trading session, profiting from small intraday price moves.
Last updated Oct 2, 2026
What it means
Day trading is the practice of opening and closing positions within a single trading session, so no trades are held overnight. Day traders profit from small intraday price moves, often making many trades a day in stocks, options, or futures. Because positions are closed before the bell, day traders avoid overnight gap risk from news that breaks after hours.
The style is demanding and expensive. Frequent trading racks up commissions and spreads, and success requires constant attention, strict risk control, and a tested strategy. Broker disclosures and independent studies consistently find that most people who attempt day trading lose money, with only a small minority sustaining profits over time.
In the United States, active day traders face the pattern day trader rule: accounts that execute four or more day trades within five business days are flagged, and flagged accounts must maintain a minimum equity balance set by regulators. Falling below it restricts the account to closing trades only until the balance is restored.
An example
For illustration, a day trader buys 100 shares at $50.20 at 10 a.m. and sells them at $50.55 at 2 p.m., pocketing the 35-cent intraday move. The position is flat by the close, so whatever happens overnight does not matter.