What Is Day Trading? Definition
Day trading definition: Day trading is a short-term stock market investment strategy in which the trader closes their positions before the markets close. Day trading involves buying and selling assets within the same day, and during that day, traders go in and out of the market many times.
Note that a day trader only holds positions for a short time within the same session. In day trading, the investor’s position is only held until the end of the day; it is never carried over to the next day.
Day traders make gains by taking advantage of market volatility. This strategy is one of the main foundations of trading.
To go further, also read our guides “Trailing Stop Definition” and “CFD Definition“.
Synonyms for Day Trading
Synonyms for day trading: Day trading is also known as “intraday trading”, meaning speculation within a session or trading during the day. It is sometimes also called “session trading”.
Where the Term Day Trading Comes From
In the stock market, day trading is an English term that literally means trading within a single day.
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A day trader is a person who day trades, meaning a trader who opens and closes their positions within one trading day. This takes place on a day trading platform.
Day Trading Terms to Know in 2026
- Scalping: Definition: Scalping is a trading strategy in which the trader opens and then closes a position within a short time to profit from small market moves. Traders who scalp are called scalpers. The goal of scalping is to open a position at a set price and close it after a few fluctuations of a few cents to make a small gain.
- Price-to-Earnings Ratio in Day Trading: Definition: The price-to-earnings ratio (P/E) is a way to assess a company’s performance by analyzing its shares on the stock market. It is the ratio that values a company relative to its competitors in the same sector.
- Stop Loss in Day Trading: Definition: A stop loss, or protective stop, is a price limit at which the trader will close their position if it is losing money.
- Gap in Day Trading: Definition : A gap is the difference between one session’s closing price and the next session’s opening price.
- Overnight in Day Trading: Definition : Overnight, or an overnight trading session, means keeping a buy or sell position on a financial asset open beyond the close of the market in question.
- Rollover in Day Trading: Definition : A rollover means keeping a position open even after an expiry. Rollover is a common term in forex, as it explains what can be earned or charged for holding a position overnight.
The 2 Types of Position in Day Trading
There are two types of position you can take in day trading:
- Short position in day trading : A short position comes from short selling, in which the investor sells a stock they do not own.
- Long position in day trading : A long position comes from owning securities, in which the trader makes a profit when the share price rises.
Key Takeaways on Day Trading in 2026
To help you remember the definition of day trading, here are the most important points:
- Day trading is a trading technique that involves opening and closing your positions within the same trading session and the same day;
- Traders particularly like day trading because it avoids several risks, including slippage, as well as overnight financing fees;
- Day trading takes a lot of time to master, so it is better suited to professional traders than beginners;
- The most common markets for day trading are stocks, indices, cryptocurrencies and forex;
- Checking a market’s liquidity, volatility and trading volume is very important in day trading;
- There are several day trading strategies you can adopt, including trend trading, swing trading, scalping, money flow and mean reversion;
- To get started in day trading, it is recommended to go step by step: first choose how you will day trade, your strategy and how you will manage it, and finally open your first position.
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