What Is Intra Day Trading?
Many online websites and financial publications talk considerably about "day traders" and day trading activities. Some offer advice on how to make money by day trading. But before putting any money into the financial markets or paying for advice, it is important to know what intra-day trading is and its serious financial risks.
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Definition
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Intra-day trading is a type of securities, mutual fund, currency, stock option or futures trading activity where a position is both opened and closed during a single trading day. An intra-day trade is completed when a security is sold on the same day it is purchased by the trader. Many "day traders" participate exclusively in intra-day trading, rarely holding securities beyond the closing bell.
Risks
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Intraday trading is considered by financial experts to be extremely risky. Intra-day market prices can change very quickly and expose a day trader to significant financial loss. The Securities and Exchange Commission warns investors against the potential risks of day trading and promotional offers associated with day trading.
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Benefits
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Financial professionals and commodities brokers often engage in day trading or intra-day as their primary occupation. Sometimes, intra-day trading is a necessary way of doing business in the securities markets--brokerages purchasing stock options, futures contracts or securities in volume cannot often do so without substantially moving the markets, so they may make purchases with the assistance of intra-day traders.
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References
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