Day Trade
A day trade is what happens when you buy and then sell (or sell short and then buy back) the same security within the same trading day. The position is opened and closed before the market closes for the day — you don't carry it home overnight.
The mechanics are simple: if you buy 100 shares of a stock at 10:15am and sell those same 100 shares at 1:40pm, that's one day trade, regardless of whether you made or lost money on it. It also counts if you go the other direction first — shorting a stock (selling borrowed shares you don't own, hoping to buy them back cheaper) and then buying it back later that same day is also a day trade.
The nuance that trips people up is that "day trade" is a specific, countable event used by brokers and regulators to classify trading activity, not just a casual description of trading quickly. In the US, accounts that place a certain number of day trades within a rolling window can be flagged as a "pattern day trader," which brings its own account requirements — the exact count and dollar thresholds are set by regulators and exchanges and have changed over time, so they shouldn't be assumed from memory. Partial closes, multiple round trips in the same stock on the same day, and trades across different but linked accounts can all complicate how a broker's system counts day trades, even though the underlying idea — opened and closed same day — stays simple.
This term depends on a rule or threshold that changes over time, so no specific figure is quoted here. The definition references pattern day trader classification triggered by a certain number of day trades in a rolling window, and associated minimum equity requirements. The specific numeric thresholds (e.g., number of trades, rolling day count, dollar minimum) are set by FINRA/exchange rules and can change; confirm current figures against FINRA's official pattern day trading rules before publishing any specific numbers.
Day traders need to know exactly what counts as a day trade because crossing certain thresholds can trigger pattern day trader status, which imposes minimum equity requirements and can restrict or freeze an account that doesn't meet them.
You buy 200 shares of a stock at 9:45am for $50.00 and sell all 200 shares at 11:20am the same day for $50.75. That single round trip is one day trade — it doesn't matter that you made a profit, or that you placed other trades that day that you held overnight.
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