What Is Day Trading?

Day trading refers to the practice of buying and selling multiple stocks within a single day. It became a popular pursuit during the frenetic Internet boom of the late 1990s, when the emergence

Differing from conventional stock trade, the net change of a stock's price at the closing bell doesn’t control one’s profits or losses. Day traders' gains and losses are determined by the price differences throughout the day; day traders must continuously monitor the prices of their stocks in order to capitalize on the ever-fluctuating differences between a stock's sale and purchase price. This price gap is known as the spread.

Many financial advisors dissuade amateur investors against day trading, as it fails to offer the slow and steady rewards gained by long-term investing. Also, day trading occurs at such a furious pace — dozens of stocks can be bought and sold within a given day — that the commissions (the money you pay the broker for the sale) and spreads can add up and eat into your earnings.