Investors against day traders

By stag89 | timely-snacks | 2 Mar 2023

The ultimate goal of a day trader is to trade pricey and erratic equities on the NASDAQ and NYSE marketplaces in lots of 1,000 shares or more in order to capitalise on the minute intraday price movements. The day trader may execute a number of trades in a single day, holding onto stocks for only a little period of time (or hours), and practically never over the course of an entire night. Short-term price speculators include day traders. Both investors and gamblers, they are neither.


Investment is not day trading. The day-long time frame of analysis for day traders is rather brief. Their sole goal is to take advantage of the stock's daily or intraday price volatility. Day traders do not aim for long-term value appreciation like stock investors do.

Day trading is not the same as investing. The time frame of analysis for day traders is relatively short: one day. Their sole goal is to profit from the stock's intraday price swings or daily price volatility. Day traders, unlike stock investors, do not seek long-term value appreciation.

Stock volatility is more of a rule than an exception in the market. The majority of stock prices rise and fall on any given day due to a variety of external factors. Even when the market is relatively calm, there are always volatile stocks. Day traders look for stocks that are trending and then follow that trend. "Trend is a friend," as the saying goes among day traders. Day traders try to capitalise on very minor stock movements, such as those of 1/8 or more. Day traders will win $125 from a 1/8 price shift if they are trading a large block of shares (1,000 shares each trade). In contrast, if a day trader bought 1,000 shares and made a mistake, which does occur, the day trader will lose $125 from a 1/8 price shift. Volatility has two sides to it.

In short, day traders seek to profit from intraday price volatility by frequently trading the stock, whereas investors seek long-term capital appreciation.

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