Day trading is a set of trading techniques where a trader buys and sells multiple times in the market over the course of a day to exploit volatility and trends in the asset's intraday price. Day trading is commonly an institutional practice because a financial institution can highly leverage its transactions to boost its profitability, as well as utilizing sophisticated trading algorithms. But as many brokerages now allow for trading online, intraday trading can be conducted by ordinary individuals from virtually anywhere, with only a few necessary tools and resources. This is allowing private individuals to get in on the game, too. But day trading is inherently a high-risk investment strategy—one that requires a great deal of diligence, knowledge, expertise, and patience.
Day Trader Resume Example
Day Trader Definition
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A day trader is a type of trader who executes a relatively large volume of short and long trades to capitalize on intraday market price action. The goal is to profit from very short-term price movements. Day traders can also use leverage to amplify returns, which can also amplify losses. While many strategies are employed by day traders, the price action sought after is a result of temporary supply and demand inefficiencies caused due to purchases and sales of the asset. Typically positions are held from periods of milliseconds to hours and are generally closed out before the end of the day, so that no risk is held after hours or overnight.
Taxes are a complicated hoop for day traders to pass through when reporting profits and losses. Below are the some of the basics about trading and taxes that can help you optimize your trading strategy and best navigate your compulsory payments to Uncle Sam. For those entirely new to financial markets, the basic distinction in tax structure is between long- and short term investments. Long-term investments , those held for more than a year , are taxed at a lower rate than trades held for less than a year , which are taxed at the normal income rate. For accounting purposes as well as a variety of practical reasons, traders should maintain separate accounts for day trading and building a long-term investment portfolio.