Business and Personal Finance Dictionary

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• DAY TRADER
  
  When you buy and sell an investment within a very short time, sometimes as short as a few minutes or perhaps a few hours, you're considered a day trader. The strategy is to take advantage of rapid price changes to make money quickly. In the past, professional investors did most of the day trading, but as online trading has gained popularity, many more individuals, usually referred to as electronic day traders, do it as well. The risk is that a day trader can lose money as well as make it, since no one can predict how or when prices will change. That risk is compounded by the fact that technology does not always keep pace with investors' orders, so a trader might authorize a sell at one price but have to wait for the order to be executed as the price drops even further. In addition, the trader pays transaction costs on each buy and sell order. Gains must offset those costs if the trader is going to come out ahead.
  
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