What is a day trade?
A day trade is a stock market transaction in which shares of stock or other securities are bought and resold within the span of one trading day. Stocks, currencies, options, and futures are some of the instruments that can be transacted in a day trade. There are many styles of day trading, especially as it has become more accessible to casual, at-home traders. For example, some day traders may invariably exit all positions before the market closes to avoid any unmanageable risks, while others believe it is acceptable to sometimes stay with a winning position after the markets close for the day. Originally, all important stock trades in the United States were made at the New York Stock Exchange. Investors would contact brokers, who would relay orders to stock specialists on the floor of the exchange. These specialists would each oversee markets in just a handful of stocks, by arranging a simultaneous purchase and sale of stock and writing up a ticket for the sale. This information would
Day trading refers to buying then selling or selling short then buying the same security on the same day. Just purchasing a security, without selling it later that same day, would not be considered a day trade. Does the rule affect short sales? As with current margin rules, all short sales must be done in a margin account. If you sell short and then buy to cover on the same day, it is considered a day trade. Does the rule apply to day trading options? Yes. The day trading margin rule applies to day trading in any security, including options. What is a pattern day trader? You will be considered a pattern day trader if you trade 4 or more times in 5 business days and your day-trading activities are greater than 6 percent of your total trading activity for that same five-day period. Would I still be considered a pattern day trader if I engage in four or more day trades in one week, then refrain from day trading the next week? In general, once your account has been coded as a pattern day t
