Day trading is defined as buying and selling the same security on the same day. The exact durations of these trades can vary from mere minutes to several hours. The Financial Industry Regulatory Authority prohibits day trading in cash accounts because all trades in a cash account must be paid for in full and it takes one business day for most securities trades to settle.
The best brokers for day trading need specific features, suitable for rapid trading of stocks, options and other financial assets. Our Best Brokers for Day Trading list considers fees, trading platform features, research and tools, education, and customer support. Extended-hours trading is a given with all of these platforms. Day trading is not for beginners, typically occurs in a margin account and is generally prohibited in a cash account.
Day traders buy, sell and short stocks, options and other financial assets during one day, rarely holding positions overnight. The goal of a day trader is to profit from small movements in the price of a financial asset.
Serious day traders, called pattern day traders, are governed by the Financial Industry Regulatory Authority, or FINRA, and must follow certain requirements. To be considered a pattern day trader, these individuals execute four or more “day trades” within five business days, and the trades must represent more than 6% of the customer’s total trades in the margin account for that same five-day period.
Day traders typically have a margin account. Pattern day traders must maintain a minimum $25,000 balance of cash and securities within this account, at least for now. However, the Securities and Exchange Commission in April 2026 approved a new rule that would eliminate the $25,000 minimum and the pattern day trader designation. The new rule goes into effect on June 4, but there will be a transition period for brokerages.
Margin trading, in and of itself, is riskier than trading in a cash account. Should an asset you bought on margin fall in value, you must cover the loss plus pay interest on the margin loan.
With day trading, you can lose money very quickly when a trade doesn’t go your way. There is a possibility that you will lose 100% of your day trading funds. Even if that doesn’t happen, making money from day trading is difficult. FINRA, for example, says that an investment account worth less than $50,000 is unlikely to make a profit. Still, a $50,000 investment doesn’t ensure a profit.
Day trading is risky, so before attempting this speculative activity it’s wise to understand the securities markets as well as day trading strategies. You will be competing with professional traders, which is a big disadvantage.
It’s also important to day trade with a well-regarded firm and understand its rules and operations, including order executions. Should trading be halted on a security, you might be unable to liquidate your position at a reasonable price.
The goal of day trading is to make a small profit from buying and selling financial assets within one day. Day trading strategies are similar to those used by technical traders, who examine asset price trends on a chart. That is why it’s important for day traders to have a fast and feature-rich charting and trading platform.
Day trading strategies include:
Breakout trading. A breakout is a price movement that is not predicted by a trend line. An asset can either have a breakout on the upside or downside. If a stock has been trading between $20 and $22 for a month, and then suddenly rises to $23 on large volume, then the day trader might assume that it is beginning an upward trend and decide to day trade that stock.
Pullback trading. If a stock has been trending upward for several trading days, it is expected to continue in that direction. When there is a small pullback, day traders might consider buying.
Consider practicing day trading with a paper account before using real money. This is a risky endeavor and best for more experienced investors with deep pockets. Educate yourself about the day trading platform and strategies that you choose. Don’t believe anyone who promises easy profits from day trading.
Find the Broker That’s Right for You
Day trading involves a considerable amount of risk. If you use leverage to purchase securities with borrowed money, you stand to lose even more than you invest. The higher the volume of your trades, the greater the risk becomes that you won’t make enough money to cover the transaction costs of your trades. Day trading can also lead to a gambling mentality and become a form of addiction.
Day traders require specific features and tools to enable rapid transactions. Given the high volume of trading involved, you’ll also want to find a platform with low fees. The best day trading platforms often include robust research tools. Depending on when you plan to trade, you may look for a day trading platform that offers extended hours trading.
