Day trading

Day trading is the practice of quickly and frequently buying and selling stocks in the belief that the investor can capture substantial value through the short-term changes in the stock price.

Expanded Definition

Day trading refers to the practice of buying and selling the same stock within the same trading day. Investors practicing day trading believe they can create substantial returns by capitalizing on the natural volatility of the market. However, the increased trading costs often wipe out accrued gains, and the resulting gains are subject to the higher short-term capital gains tax instead of the lower long-term capital gains tax.

Related Fool Articles

• Day Trading Dangers
• The Shaky Logic of Day Trading
• Fool FAQ: Day Trading
• Day Trading for Fun and Profit
• Steer Clear of Day Trading
• Where the Day Trading Money Is

Related Terms

• Buy and hold

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