What Is Intraday Trading?

Intraday trading is a type of short-term investing that seeks to find smaller trends in the marketplace and take advantage of them. This type of trading is similar to day trading, but it differs in a few key areas. Here are the basics of intraday trading.

Intraday Trading

With day trading, an individual seeks to take advantage of small changes in the price of a security in the same day. With intraday trading, an individual does not close out her position in the same day. She might hold a stock for a few days or even a few weeks in order to try to make a profit. She will try to identify a short-term trend and then ride it out until it starts to change directions.

Requirements

If you are a day trader, you have to abide by specific rules set forth by the Securities and Exchange Commission (SEC). For example, you have to have $25,000 in your account in order to trade. You also have to trade in a margin account. However, if you will engage in intraday trading, you do not have to abide by these rules. Therefore, by holding the position overnight, you can avoid the label of "day trader."

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