Home › Glossary

What is day trading?

In one line: Day trading means opening and closing your trades within the same day, so nothing is held overnight.

Trading glossary · Updated 2026-10-21

A simple example

The US stock market opens at 9:30 am ET. At 10:05 am, a stock pulls back to a level you marked before the open. You buy, with your stop loss under the last dip and a target at the next ceiling.

At 11:40 am the target fills. You're done. By 4:00 pm, the close, you hold nothing — whatever happens overnight can't touch the trade.

That's one day trade. If the stop had been hit instead, the trade would have closed for a loss the same way.

Why it matters

Not holding overnight removes one risk: the price jump that can happen between one day's close and the next day's open, called a gap.

But day trading asks for other things:

• Screen time. You need to be watching during market hours. Check our market hours tool for your time zone.
• More decisions. More trades mean more chances to break your rules.
• Costs add up. Fees and spread are paid on every trade.

The old $25,000 rule

For years, US stock day traders with margin accounts needed $25,000 under the PDT rule. That minimum was eliminated in 2026. Brokers can still set their own requirements, so check yours.

A common mistake

Trading too much. A slow morning feels like wasted time, so trades get forced. That's how a plan turns into guessing.

To see whether it suits you, read day trading for beginners and day trading vs swing trading.

Questions