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The day trader's ultimate objective is to trade expensive and volatile stocks on the NASDAQ and NYSE markets in increments of 1000 shares or more, and profit from the smaller intra-day price movement.
The day trader might make a lot of trades in one day, holding onto stocks for only a few minutes (or hours), and almost never overnight. Day traders are short-term price speculators. They are not investors, and they are not gamblers.
Day trading is not investing. The day trader's time frame of analysis is rather brief: one day. Their only intent is to exploit the stock's intra-day cost swings or daily price volatility. Unlike stock investors, day traders do not seek long-term value appreciation.
Stock volatility is generally a rule of the market rather than an exception. Most stock prices move up or down in any given day due to many different external factors.
Even when the market is fairly calm, there are always stocks that are volatile. Day traders seek to identify a stock that has a trend and then go with that trend. "Trend is really a friend" is a common motto amongst day traders.
Day traders seek to pick up a relatively smaller stock movement, 1/8 or more on that stock. If day traders are trading a large block of shares (that is, 1000 shares per trade), then day traders will profit $125 from a 1/8 price movement.
Conversely, if a day trader acquired 1000 shares and the trader was wrong, which also occurs, then the day trader will lose $125 from a 1/8 price movement. Volatility is actually a double-edged sword.
For pricey stocks that trade for $100 or more, a 1/8 or 13 cents movement is such a small relative price change that it happens all the time. Consequently there are plenty of day trading opportunities.
It is not common to see a day trader performing many, sometimes as many as 100, trades in a day. However, an investor's time frame is a lot longer. Investors seek a much larger price movement than 1/8 to earn the desired rate of return. That takes time.
In short, day traders seek to extract an income from intra-day price volatility by trading the stock often, whilst the investors seek a long-term capital appreciation.
If you are in need of instant business capital and are interested in putting your money into the stock market, success doesn't happen overnight.
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