What is the general meaning of Day Trading?
Day Trading means taking a position in the markets with a view of squaring that position before the end of that trading day (Within the trading hours). The goal of a day trader is to capitalize on price movement within one trading day. Unlike investors, a day trader may hold positions for only a few seconds or minutes, and never overnight.
What does Day Trading do really mean?
The term "day trading" is a widely misused and misunderstood term. Real day trading means not holding on to your stock positions beyond the current trading day; in other words, not holding any position overnight. This is really the safest way to do day trading because you are not exposed to the potential losses that can occur when the stock market is closed due to news that can affect the prices of your stocks.Unfortunately, many people who claim to be "day trading," hold stocks overnight because of fear or greed, thus setting themselves up for the catastrophic elimination of their capital. When day trading currencies, the term "day trading" changes slightly. Since currencies can be traded 24-hours-a-day, there is no such thing as "overnight" trading. Thus, you can have open positions for longer than a day with active stop losses that can be activated at any time.
Advantages & Disadvantages of Day Trading:
Though it’s a very tactful game and need to be played with full strategy to avoid any confusion and miscalculation. Any simple mistake could stuck you in such a mess that there is chance of great destruction of the capital.
Though the main two advantages of the same could be summarized as below:-
1. Zero Overnight Risk: Since positions are closed prior to the end of the trading day, news and events that affect the next trading day's opening prices do not effect your portfolio.
2. Increased Leverage: Day Traders have a greater leverage on their trading capital because of low margin requirements as their trades that are closed in the same market day. This increased leverage can increase your profits if used wisely.