day trader

noun

|Updated on: 21 Jun 2018

Definition of day trader

: a speculator who seeks profit from the intraday fluctuation in the price of a security or commodity by completing double trades of buying and selling or selling and covering during a single session of the market

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day-trade

play \ˈdā-ˌtrād\ noun or verb

See day trader defined for English-language learners

Recent Examples of day trader from the Web

Le went on to become a wedding coordinator and Lioe a business investor and day trader.

— hang nguyen, sandiegouniontribune.com, "Cauldron, home to the viral 'puffle cone' ice cream, opens first San Diego shop," 8 June 2018
News outlets report that a judge set day trader Daniel Beckwitt's bail at $100,000 in the death of Askia Khafra.

— crimesider staff, CBS News, "Md. millionaire charged in death of man he hired to dig tunnels beneath his home," 1 June 2018
In 2005, Nichols, who was 10 years older than Rhonda and recently divorced, was working as a day trader.

— peter van sant, CBS News, ""There's definitely a lot more to the story" says man charged in fiancée's fatal fall from cliff," 17 Mar. 2018
Rhonda's mother doesn't believe a word of Nichols' story, saying the insurance was all his idea and that Nichols, the day trader, had an ulterior motive.

— peter van sant, CBS News, ""There's definitely a lot more to the story" says man charged in fiancée's fatal fall from cliff," 17 Mar. 2018
Pinstripes are typically the province of mob bosses and day traders—the kind of guys who want their suits to speak loudly for them.

— megan gustashaw, GQ, "Pinstripes Aren’t Just for Bankers Anymore," 16 Mar. 2018
Marie-Noelle Levin, an actress and day trader, pulled up on a bicycle, dressed entirely in fur.

— andrew marantz, The New Yorker, "The Duchess of Windsor’s Favorite Sheets, On Sale," 9 Feb. 2018
China still has a large army of day traders, as the American embassy can attest, but institutions have led a shift in money from small-cap firms to blue-chip stocks.

— The Economist, "China’s stockmarket plunge: this time it’s different," 15 Feb. 2018
Slightly more than half of all U.S. families own stocks in some way, from workers who got automatically enrolled into their 401(k) retirement accounts to day traders working their personal accounts.

— stan choe, Houston Chronicle, "More Americans hold stocks, for better or for worse," 10 Feb. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'day trader.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of day trader

1953

in the meaning defined above

See Words from the same year

NEW! Time Traveler

Financial Definition of DAY TRADER

day trader

noun

What It Is

Day trader is a term applied to a very active securities trader who holds securities for a short period of time. Day traders will often open and close a position within the same day.

How It Works

While many day traders focus on stocks, the practice is not limited to equities. Some day traders also buy and sell bonds, foreign currencies, commodities, options, and even derivatives contracts.

There are several types of day traders. Some are called scalpers; they attempt to earn small profits on large volumes of securities. Meanwhile, momentum traders look for securities that are exhibiting strong trends on a particular day and attempt to profit from those trends. Day traders often use technical analysis to determine which securities to trade, as well as to pinpoint the ideal entry/exit points for their transactions.

Day traders tend to execute most of their transactions through low-cost online discount brokers, as the higher commissions paid to traditional full-service brokers would soon become cost-prohibitive. Some day traders avoid using market makers or brokers entirely by purchasing memberships in direct-access broker systems. These systems route orders to an electronic communications network (ECN), which is a computerized matching system that allows traders to advertise bid or ask prices and execute trades.

Most day traders close out their positions at the end of the trading day to avoid the potential negative effects of news, earnings announcements, or changes in investor sentiment that may occur overnight. Those willing to bear this risk and hold securities for up to several days are often referred to as swing traders.

Why It Matters

During the bull market of the late 1990s, day trading became an increasingly popular way to generate quick and easy profits. However, many day traders had little formal financial training or investment expertise, and a large number were wiped out by the brutal bear market that ensued from 2000-2003. Some people consider day trading nothing more than another form of gambling, and claim that its introduction has increased volatility in the markets. Meanwhile, others believe it to be a legitimate means of capitalizing on short-term trading patterns.

In either case, day trading requires solid analytical skills and strict discipline, particularly for those that want to make a career of it. Given the exceptionally speculative nature of market timing, day trading is probably not prudent for those without the considerable financial expertise and emotional stamina needed to withstand the substantial risks involved.

Source: Investing Answers