What do Day Traders Do?

Before the internet became a feature in most households in the US, people interested in trading stocks or any other type of financial instruments had to go through a professional stockbroker. However, these traders, called speculators, can now make trades from the comfort of their own homes and on their own schedules. For that reason, a method called day trading has become a viable way for speculators to make money.

Day traders buy and sell stocks within the same trading day. The motive of day traders is purely profit. There are two distinct styles of day trading, and the difference between them is the amount of time that the trader holds on to the investment.

Short-term trading, also known as scalping, is completed in a matter of seconds. While these trades usually only amount to a fraction of a cent, day traders might complete many in a day, and the profit adds up quickly. Scalpers will usually make a slightly higher bid on stocks to ensure that they own it, and then they will sell it for a higher price than they bought it, which is often so small it is barely noticeable.

Longer-term day trading, called swing or position trading, involves holding onto the stock throughout the day and waiting for the price to go up enough to sell. However, day traders will always sell in the same trading day.

The method that day traders choose to use depends mostly on their personality and how willing they are to watch the stocks throughout the day. Some day traders will make many small trades all day long, while others might just make one highly-profitable trade every day. However, no matter which method day traders use to handle stocks on a given day, their main goal is profit.