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A day trader is market participant who generally closes out all trading positions before the market closes for the day. The growth of online discount brokerage in the late 1990s made possible the amateur day trader. The professional day trader, in contrast, probably trades for a living. The professional day trader can often avoid retail brokerage commissions by placing trades via direct access to an electronic communication network, or ECN. The professional day trader may focus very narrowly on a single market, like one commodity, or a few stocks in a particular sector of expertise. As a speculator, the day trader increases market liquidity. By narrowing the bid-ask spread, the day trader thus also tends to reduce the profit per trade of a market maker. |
