Tuesday, November 6, 2007

Day trader

This article is about a trader who uses "day trading" strategies/techniques. For the characteristics

of "day trading" and its strategies/techniques etc., see the article day trading.

A day trader is a trader who buys and sells financial instruments (eg stocks, options, futures,

derivatives, currencies) within the same trading day such that all positions will usually be closed

before the market close of the trading day. This trading style is called day trading. Depending on one's

trading strategy, it may range from several to even a hundred orders a day.


Most day traders are full time due to the devotion of time.

There are 2 major divisions of day traders: institutional and individual day trader.

An institutional day trader is a trader who works for a larger financial institution. This type of

trader has more advantages than individuals since he/she has more resources and access to different

research tools and equipment: large amounts of capital and leverage, large availability of fresh fund

inflows to trade continuously on the markets, dedicated and direct lines to data centers and exchanges,

expensive and high-end trading and analytical software, support teams to help, and much more. All these

advantages allow them to forestall other day traders and minimize the high risks involved in day


An individual day trader is a trader who works for him/herself. He/she usually works alone. An

individual trader generally trades with one's own capital, from loans, or get finances from others

privately and manage their money. Law has restricted the number of people's money an individual trader

can manage. In the United States, day traders may not advertise as advisors or financial managers.

Nowadays nearly all individual day traders choose direct access brokers as they can offer fast and

direct access to the exchanges, and offer better trading platforms.

In the past, most day traders were institutionals due to the huge imbalances between them and

individuals. Since the technology boom in the second half of the 1990s, the advance in technology and

the popularity of personal computers and Internet, offer fast online trading and powerful analytical

facilities at relatively low costs. Regulation improvements in favor of small and individual traders

help to smooth the imbalances too. All these attract more and more individual and casual traders to day


Famous day traders
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* Bruce Kovner
* Mark O. Barton, spree killer
* Victor Niederhoffer
* Flemming Kozok, successful Danish day trader

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