What Is Day Trading

day trading dedfinitionDay trading refers to speculative trading on a stock exchange during the trading day without transferring open positions the next day. This term refers to a strategy in which exclusively intraday operations are used, with the duration of holding securities from minutes to several hours. Many traders can use several strategies at the same time, one of which is conducting intraday operations.

Initially, DT was used exclusively by financial companies and professional speculators. Such trade was carried out by employees of banks and investment firms. However, with the spread of e-commerce and margin trading, this type of activity has become popular among individual non-professional traders.

Margin trading is typically used to increase the profitability of operations, which leads to increased risks. For intraday transactions, it is more likely to rely on technical analysis rather than fundamental analysis.

Day trading for individuals has been permitted in the United States since 1996. For 2000, on the NASDAQ exchange, intraday private transactions were estimated at about 15%. Moreover, more than 70% of private day traders lost money during their activities, according to a 1999 study by the North American Securities Administrators Association.

Since the late 1990s, there have been hundreds of companies that provided access to trading and trained their clients in intraday trading. Unlike traditional broker companies, these companies promoted active trading as a strategy or investment program and sold courses to train such activities. To cover future losses, customers often needed to make a significant deposit in advance.

Day Trading in UK

In the United Kingdom, day trading is carried out via brokerage companies. The top 3 DT brokers in Great Britain are Fofex, IC Markets, and CMC Markets. The brokers are regulated by the FCA (Financial Conduct Authority). Day trading in UK is taxed by HRMC (Her Majesty's Revenue and Customs).

Day Trading Definition

The day trading definition is as follows: it is a type of speculative trading, in which a trader completes all open transactions during the day without transferring them to the next day. In simple words, this is trading within one working day.

By making small but quite frequent transactions, the trader has an opportunity to better understand the process without any big losses. In this case, the profit will be small but regular.

For more information on other financial terms in addition to day trading, refer to financial dictionary at Monfex.com.

Benefits of Day Trading

It is not always easy to work with this method because the day trader must have good willpower, endurance, and perseverance. Nevertheless, the advantages of DT are obvious:

  • The day trader is able to easily control all of their risks.
  • There are no gaps in the work.
  • Convenient leverage is always available.
  • There are a lot of convenient tactics and strategies for DT.

Day Trading Strategies

Choosing the right strategy for work is the key to success both in the Forex currency market and when working with binary options or cryptocurrencies. So, for DT, the following strategies are considered the most popular:

  • Scalping strategies - working on short intervals and minute charts. These strategies have an impressive leverage, but at the same time they carry high risks, psychological stress, and a relatively small income.
  • Hourly interval strategies: allow you to apply analysis and increase the amount of income from transactions.
  • Strategies designed to work in a few hours: give small leverage and the best profit.

Day Trading Cryptocurrency

Before you start day trading cryptocurrency, you must know the following:

  • You can trade Bitcoin directly by buying and selling it through digital currency exchanges. Some trade them through derivatives such as contracts for difference (CFDs), which are offered by most Forex brokers. However, CFD liquidity is often uncertain. Brokers are also often accused of manipulating the spread, chasing stop loss, and causing slippage in the asset price.
  • You need a safe and reliable trading platform, such as Monfex.com.
  • Commissions will affect your profits. The types of commissions that you will encounter are exchange commissions, trade commissions, and those related to the transfer of funds (deposits and withdrawals). The exchange commission is the one that the exchange charges you for using its services. Trading commissions are reduced to commissions of market makers and market takers (market participants who create and accept orders). Commissions for deposit and withdrawal of funds depend on the exchange and money transfer method that you have chosen.
  • You need to understand the laws governing cryptocurrencies in the jurisdiction of your residence.
  • Your profit from trading cryptocurrency assets can qualify as a capital gain. You must understand how taxes on your cryptocurrency income are calculated.
  • Volatility is needed, and “extreme asset volatility” is always good news for a day trader.
  • You need proper trading volumes to avoid slippage.
  • It’s useful to have a basic understanding of blockchain technology. This is necessary for trading based on news and announcements.

In our financial dictionary at Monfex.com, you can find a wide variety of financial terms, including the definitions of cryptocurrencies.

Here is a couple of cryptocurrency DT strategies for beginners:

  • Trends and corrections. This is probably the simplest approach to DT that lies in keeping track of the price. Some people wait for a trend correction to occur and trade on it. Others trade on the renewal of the trend after the correction. In both cases, it is necessary to determine the beginning and end of the correction. To do this, day traders follow the candle patterns.
  • MFI index. The use of various technical indicators for cryptocurrency charts is a common practice among bitcoin day traders. The MFI (Money Flow Index) indicator makes it easy to determine the activity of cryptocurrencies.


Now you are aware of what is day trading, what are the features of day trading in UK, and how to day trade with cryptocurrency. Monfex.com is a secure, powerful, and user-friendly online platform where you can trade cryptocurrencies. Contact us today to learn more.