Day trading is a form of online trading that is defined as starting and ending a trade in the same day. Day traders should never hold stock overnight, although this changes somewhat when it comes to the foreign exchange market.
Standard stocks are not traded over a 24 hour period and so trading finishes at the end of the day before starting again the next. Some participating in online trading using the day trading method can make any from one to one hundred trades in a single day, attempting to profit from small fluctuations over a very small time period.
The different approaches to day trading online
There are typically two approaches, the first is to beat the spread and the second is to counter-trend. Beating the spread involves catching short terms trends in an attempt to buy at the bid and sell at the ask, but with spreads today as low as one penny this has method has become less profitable. Trading online using counter-trend involves placing a trade when you believe a the price of a stock is likely to turn and go the other way.