Day trading is a trading strategy where positions are opened and closed within the same trading day, with no positions held overnight. Day traders capitalize on short-term price movements, typically holding positions for minutes to hours. This approach eliminates overnight risk but requires significant time commitment, fast execution capabilities, and strict risk management.

Day trading requires substantial capital, advanced trading platforms, and deep market knowledge due to the rapid decision-making required. Regulatory requirements like the Pattern Day Trader rule in the U.S. mandate minimum account balances for frequent day trading. Success depends on technical analysis skills, emotional discipline, and the ability to cut losses quickly while letting profits run.

Real-world example: A day trader buys 1,000 shares of Amazon at $3,100 at 10 AM after identifying a breakout pattern, then sells at $3,120 by 2 PM, capturing a $20,000 profit without overnight exposure.