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By Andrew Aziz  |  
Andrew's Newsletter  |  
Sep 7, 2022

What Is Day Trading?

As the name suggests, day trading is based on buying and then selling stocks within a single day, and sometimes within minutes or seconds.  Unlike traditional investing, which usually involves thoughtful market analysis and long-range planning, day trading focuses on the countless up-and-down price fluctuations that characterize a typical trading session and, if it is done skillfully, takes advantage of them. 

As a day trader, I look for stocks that are moving in a relatively predictable manner. My goal is to trade them that same day and not to keep any position overnight. Keeping stocks overnight is not day trading. That is swing trading, which is a completely different style of trading, with its own strategies, tools, timeframes, regulations, market segments and revenue models.

Many traders, including myself, do both day trading and swing trading. We are aware that we are running two different businesses, and we have gone through separate educational programs on the two kinds of trading. One of the key differences between day trading and swing trading is the approach to stock picking. I do not swing trade and day trade the same stocks. Swing traders usually look for stocks in solid companies that they know won’t lose their whole value overnight. 

For day trading, however, you can trade anything, including companies that are going bankrupt soon, because you don’t care what happens when market closes. In fact, many of the companies that we day trade are too risky to hold overnight because they can lose a lot of value in just that short period of time.

What Isn’t Day Trading?

In my opinion, the most important lesson that you can learn from reading this blog is that you will not get rich quickly by day trading. Day trading is not like gambling or lottery play. This is the most important misconception that people have about day trading. In fact, statistically speaking, 90% of people who start day trading fail and lose their money. It is easy to be one of those 9 out of 10 people.

Two Fundamental Facts about Day Trading

Fact 1: Day trading is not a strategy to get rich quickly.

A misconception that some people have about day trading is that it will make them wealthy in a short period of time.

Right from the beginning, you need to accept the fact that day trading will not result in instant wealth. If you even begin to believe that you can get rich fast in the stock market, you should stop reading this blog right now and use the savings that you put aside for day trading for a family vacation. It would be much more satisfying to spend it like that rather than by losing it in the stock market. In day trading, you will be competing with some of the sharpest minds in the world. The market is a massive crowd of traders, with each trader trying to take money from the others by outsmarting them. The main objective of day trading is to take money from other traders while they are trying to take yours. It’s a challenging and intellectually-intense business.

Day traders do not generate money in the stock market. The only reason there is money in the markets is that other traders have put it there. The money you want to win belongs to other traders, and they have no intention of giving it to you. Trading means trying to take money from other traders while they are trying to take yours. That’s why trading is such a hard business.

Fact 2: Day trading is not easy. It is a serious business, and should be treated it as such.

You can succeed in day trading only if you handle it as a serious intellectual pursuit. Emotional trading is the number one reason that traders fail. You will need to practice defensive money management. Good traders watch their capital as carefully as professional scuba divers watch their supply of air.

In reality, day trading is a challenging professional pursuit, very much like medicine, law, and engineering. Day trading requires the right tools and software, education, patience, and practice. You will have to spend countless hours reading about trading styles, watching how experienced traders are trading, and practicing in simulator accounts to learn how to trade with real money. An average successful day trader can make between $500 and $1,000 every day. So why would anyone expect a job that pays this well to be easy? 

So if it isn’t easy and doesn’t get people rich quickly, why would you want to do day trading? 

One major factor that makes day trading attractive is the lifestyle. You can work from home for only few hours a day and take days off whenever you want.  Day trading is a self-employment business. You are the CEO, and you make the executive decisions of your business. It’s also intellectually stimulating and potentially financially rewarding.

Three Essentials for Successful Day Trading

Whether you are a seasoned veteran of day trading or someone who is simply thinking of becoming involved, there are three fundamentals you must keep in mind.

Ongoing Education: As a very first step and an important reality of everyday life, you absolutely need to be immersed in ongoing education. There is no shortage of valuable resources, including books, articles, and online and in-person courses.  

Simulated Training: Never start your day trading careers with real money. To avoid potential financial disaster and make your training less stressful and more enjoyable, do your learning on a simulator with real time market data.

Mentorship and a Community of Traders: You need to be part of a mastermind group that will add value to your trading career. I encourage you to join a community of traders. Trading alone is very difficult and can be emotionally overwhelming. It is very helpful to join a community of traders so that you can ask them questions, talk to them, learn new methods and strategies, get some hints and alerts about the stock market, and make your own contributions.


Would you like to ask Andrew Aziz some questions or share your own experiences? He would enjoy hearing from you at [email protected].