December 17, 2020 By Swapnil Suryawanshi

Day trading is a form of speculation in securities in which a trader buys and sells a financial instrument within the same trading day, such 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.

Chart of the NASDAQ-100 between 1994 and 2004, including the dot-com bubble

Some of the more commonly day-traded financial instruments are stocksoptionscurrency including cryptocurrencycontracts for difference, and futures contracts such as stock market index futures, interest rate futures, currency futures and commodity futures.

Profitability and risks :

Because of the nature of financial leverage and the rapid returns that are possible, day trading results can range from extremely profitable to extremely unprofitable; high-risk profile traders can generate either huge percentage returns or huge percentage losses.

Day trading is risky, and the U.S. Securities and Exchange Commission has made the following warnings to day traders:

  • Be prepared to suffer severe financial losses
  • Day traders do not “invest”
  • Day trading is an extremely stressful and expensive full-time job

Is day trading illegal :

Yes, day trading is legal in Australia. Although it is still important to make sure you are trading with a trusted and regulated provider. For example, IG is authorised and regulated by the Australian Securities and Investments Commission (ASIC).

Day Trade Definition: Stock Trading Terminology For Beginners | Bulls on  Wall Street

How much do day traders make :

An article by forex day trader Cory Mitchell says that if on average, you make around 100 trades per month (that’s approximately 5 trades per day/20 days per month) and your starting capital is $30,000, you can make around $3,750. Of course, you do have to pay commissions and other fees

Can you day trade with $500 :

While growing a small account with a balance like $500 or $1,000 can be more comfortable because there are more opportunities available to you, markets are generally efficient and finding edges is difficult and takes a lot of work and study.