Facts

• Day trading is a stressful job because of the long hours and high risk. According to the U.S. Securities and Exchange Commission (SEC), day traders typically suffer severe financial losses in their first months of trading, and many never make a profit. In spite of that, a March 2010 "New York Times" article reported that day traders, who are mostly male, did not wither away and die in the recession that began in 2008. Although their numbers are down from the technology peak of 2000, the spirit is still very much alive in 2010.
  
  

Strategies

• Day traders do not "skip most of the day," as some professional traders do, according to a September 2010 "Wall Street Journal" article. Those traders may focus only on the first and last couple of hours of trading. However, for day traders, every minute counts in terms of profits and losses. Unlike regular investors, day traders are not looking for 5 or 6 percentage point profits over weeks or months; rather, they may be looking for 5 or 6 cents of price movement over seconds and minutes. This is especially the case in fast-moving markets when prices can change significantly in minutes. To keep pace with technology-driven trading strategies that use computers to automatically enter trades, day traders typically also use automated programs that provide price charts, price change signals and technical indicators for facilitating buy-sell decisions.
  
  

Risks

• Day trading is risky and can result in substantial financial losses in a short period, according to the SEC. The Federal Trade Commission notes that some traders lose their entire savings, and those who trade on margin -- money lent by the brokerage -- can potentially lose more than their savings. Aspiring traders should be wary of day-trading firms that promise guaranteed high levels of earnings, and they should consult with consumer protection agencies and securities regulators before signing on with a day-trading firm.
  
  

Taxation

• The Internal Revenue Service makes a distinction between "trader" and "investor" for taxation purposes. Investors typically trade securities and expect income from dividends, interest or capital appreciation. Traders seek to profit from daily -- in the case of day traders, hourly -- price movements and carry on the activity with continuity and regularity. In other words, a full-time day trader with no other significant source of income would most likely file her taxes as a trading business and not as an investor.