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Day Trading

Day Trading is best defined as the process of rapidly buying and selling securities in hopes that the specific security will continue to climb or fall in the next few minutes, which would then allow the day trader to cash in on quick profits. These positions are opened and closed on the same day. The SEC says “Day trading is extremely risky and can result in substantial losses in a very short period of time.” Explains Day Trading

In general, the popularity of day trading soars when the stock market is doing well. When the market begins to struggle, day trading becomes even more risky and some amateur day traders decide to call it quits. The SEC adopted a new major rule in late September of 2001 called the “Pattern Day Trader Rule.” Which investors are deemed to be pattern day traders? Straight from the SEC website it says that FINRA rules define a pattern day trader as “any customer who excutes four or more day trades within five business days, provided that the number of day trades represents more than six percent of the customer’s total trades in the margin account for that same five day business period.”