The Ins and Outs of Day Trading


Mins Read 3


Investing means making decisions for yourself. How often you trade your stock market positions is part of that. Some investors decide to buy and sell stocks in the same market day – which is called day trading

How is day trading different from other types of investing, and is it actually profitable? Let's find out.

How day trading works

Those who day trade usually purchase and sell securities within a day, using leverage and short-term trading strategies to take advantage of minute-by-minute price movements. 

They make trades based on corporate earnings, interest rates, economic news, and more. Day traders seek to make quick, small, and numerous financial gains on their investments.

Some forms of day trading include:

  • Scalping: Making many smaller profits based on small price changes throughout the day

  • Range trading: Using support and resistance levels to make decisions around buying and selling

  • High-frequency trading (HFT): Using tech and algorithms to take advantage of short-term market inefficiencies

Day traders often trade on margin, which means they borrow money from the broker to execute the trade. This is extremely risky.

Day trading vs. swing trading vs. long-term trading

Day trading focuses on making multiple trades per day and capitalizing on these transactions, with no securities owned overnight. These traders use high-tech tools and platforms to stay on top of the market's snappy changes. 

Swing trading looks at swings in securities that take place over weeks or month. Swing traders look at major momentum indicators. This can be done with a standard brokerage account as there aren't rules against swing trading.

Long-term trading refers to holding a position for a year or more. Long-term traders look at broader analyses of their holdings. This type of trading is most popular, with many Middle Eastern brokerages specializing in long-term trading.

Is day trading profitable?

Day trading isn't for everyone. While the internet has given everyday folks the freedom to learn and execute trades daily, it's worth noting that day trading is largely unprofitable – unlike swing and long-term investments, which can rake in serious returns. 

Research shows that more than 97% of day traders lose money from their trades over time, with just under 1% of traders actually making a profit.

Check your brokerage for day trading rules

Day traders are subject to specific requirements set out by FINRA and enforced by US brokerages:

  1. A day trader must maintain a minimum equity of $25,000 every day they trade. 

  2. A trader can trade up to $100,000 (or four times the minimum equity) by the close of business of the previous day. If the trader exceeds their buying limitation, they have five business days to deposit funds as the brokerage will issue a margin call to cover the trades.

  3. FINRA rules also state that funds used to meet the maintenance requirement must remain in the trader's account for two full business days.

Some brokers don't allow day trading at all because it's too risky for average investors to take on.

Never miss a thing!

news and markets updates

* Terms apply

Raseed Invest Limited © 2021 - All Rights Reserved.

Raseed Invest Limited (“Raseed”) registered in the Dubai International Financial Centre (“DIFC”) and is regulated by the Dubai Financial Services Authority (“DFSA”) to conduct financial services “Arranging Deals in Investments” with a 'Retail' endorsement. Raseed does not provide any trading or investment advice and shall not be responsible for any loss arising from any investment based on any general information provided by Raseed or as may be available on Raseed’s website and other web-based services (collectively, the “Website Services). Raseed does not warrant that the information is accurate, reliable or complete or that the supply will be without interruptions. Any third party information provided through does not reflect the views of Raseed.

The content of the Website Services provided by Raseed is only intended to provide you with general information and is neither an offer to sell nor a solicitation of an offer to purchase any security and may not be relied upon for investment purposes. Any commentaries, articles, daily news items, public and/or private chat publications, stock analysis and/or other information contained in the Website Services should not be considered investment advice.

Raseed shall not be liable for any delay, inaccuracy, error or omission of any kind in the information provided by Raseed and/or any third party information provider or for any resulting loss or damage you may suffer as a result of or in connection with the information supplied by Raseed and/or any third party information provider. In addition, Raseed shall have no liability for any losses arising from unauthorized access to information or any other misuse of information.

Any opinions, news, research, analysis, prices, or other information contained on our Website Services or emailed to you are provided as general market commentary, and do not constitute investment advice. Raseed will not accept liability for any loss or damage, including, without limitation, for any loss of profit which may arise directly or indirectly from use of or reliance on such information. Each decision as to whether an investment is appropriate or proper, is an independent decision by you. You agree that Raseed has no fiduciary duty to you and is not responsible for any liabilities, claims, damages, costs and expenses, including attorneys’ fees, incurred in connection with you following Raseed’s generic investment information. Raseed makes no representations as to whether a particular investment is appropriate or suitable for you.

View important disclosures