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Recently I got into trading thanks to the Robinhood app, for which there's no cost to trade. My question is regarding what constitutes "day trading".

Example 1: You sell 20 stocks with ticker symbol "C" and on the same day you buy 10 or 20 stocks with ticker symbol "A"... Would this be consider "day trading" given that you made a sell/buy transaction on the same day?

Example 2: You sell 20 stocks with ticker symbol "A" and on the same day a few hours later you buy 10 or 20 stocks of the same ticker symbol "A". Is this considered day trading because it's the same stock?

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    What is the actual problem you face? What does it matter as to what counts as "day trading" and what does not; and where does Economics come into it? What difference will the answer make to you? – EnergyNumbers Jul 20 '16 at 16:59
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    Here are the deifnitions:optionshouse.com/margins-buying-power/… . Yes apparently, for the purposes of your brokerage account you become a day trader if you open ad close a position in the same asset in the same day... More interestingly, however, is that in the "street" a day trader is someonwe who speculates, but closes all positions before the end of the day, thus, he carries no overnight risk. – Fix.B. Jul 21 '16 at 3:18
  • @Fix.B Thanks for your Answer !!! I really appreciated !! – Cris Jul 30 '16 at 16:19
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The American "Security Exchange Commission" has imposed a rule upon all stock trading accounts. This rule is "Regulation-T". This rule specifies that stock trading accounts must be permitted three days after the termination of a trade to settle the account. This is just fancy lingo to justify the guarantee that the funds are either transferred out of your account to another persons (the person that made money), or the money flows into your account. A "Day Trader's" account avoids the hassle because you're borrowing money from your broker to trade with and circumvent Reg-T. It's technically not how long you hold the trade that determines if you're a day trader, or not. It's your accounts liquidity and your credit worthiness.

  • How long you hold the stock is at the core of the definition of day trading. Buying and selling a stock in the same day is a day trade. Making 4 day trades in 5 business days will classify you as a "pattern day trader". This has certain implications for the account including the need to maintain a minimum balance of $25,000. You can trade on sequential days and not be a day trader yet still have liquidity issues if you don't have the assets to settle the trade in your account. This brings up another problem known as free riding which is outside the scope of the question. – homer150mw Jul 29 '16 at 16:13

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