![]() In the United States, based on rules by the Financial Industry Regulatory Authority, people who make more than 3 day trades per 5-trading-day period are termed pattern day traders and are required to maintain $25,000 in equity in their accounts. ĭay traders generally use leverage such as margin loans in the United States, Regulation T permits an initial maximum leverage of 2:1, but many brokers will permit 4:1 intraday leverage as long as the leverage is reduced to 2:1 or less by the end of the trading day. Day trading may require fast trade execution, sometimes as fast as milli-seconds in scalping, therefore a direct-access day trading software is often needed. Day trading contrasts with the long-term trades underlying buy-and-hold and value investing strategies. Traders who trade in this capacity are generally classified as speculators. Chart of the NASDAQ-100 between 19, including the dot-com bubbleĭay trading is a form of speculation in securities in which a trader buys and sells a financial instrument within the same trading day, so that all positions are closed before the market closes for the trading day to avoid unmanageable risks and negative price gaps between one day's close and the next day's price at the open. ![]()
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