Define SEC Day Trade
Day traders take risks on expected short-term gains in the stock market. These risks are realized on the same day the stock is purchased because it is sold bought and sold the same day.
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Definitions
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According to moneyinstructor.com, the U.S. Securities and Exchange Commission classifies a day trader as someone who buys and sells the same stock within the same day four days out of a five-day time frame.
Time Frame
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According to the SEC, day traders do not hold stocks in their account overnight. Instead, they attempt to trade them for profits the same day they purchase them.
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Features
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Day traders invest in a variety of investment opportunities on the stock market according to daytradingpro.com. These include futures, currencies and options in addition to stock purchases.
Considerations
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The SEC website indicates that typical day trading is done by borrowing the money used to purchase a stock, then paying off the loan quickly. Borrowing the money increases the return the investor needs on his investment and the risk involved.
Restrictions
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According to the SEC website, any investor considered to be a frequent day trader is required to have $25,000 in a trading account and is allowed to trade only in margin accounts.
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References
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- Photo Credit Image by Flickr.com, courtesy of Perpetual Tourist
