In addition, in the United States, the Financial Industry Regulatory Authority and SEC further restrict the entry by means of "pattern day trader" amendments. Pattern day trader is a term defined by the SEC to describe any trader who buys and sells a particular security in the same trading day (day trades), and does this four or more times in any five consecutive business day period. A pattern day trader is subject to special rules, the main rule being that in order to engage in pattern day trading in a margin account, the trader must maintain an equity balance of at least $25,000. It is important to note that this requirement is only for day traders using a margin account.
The most significant benefit of day trading is that positions are not affected by the possibility of negative overnight news that has the potential to impact the price of securities materially. Such news includes vital economic and earnings reports, as well as broker upgrades and downgrades that occur either before the market opens or after the market closes.
It needs sheer dedication, hard work, patience, quick wit and immense knowledge to be successful in intraday trading. Successful intraday trading involves 90% waiting and 10% execution. So, yes, it can make a trader rich in a relatively short period of time if the correct processes are followed, and yes, it is possible to hold on to the profits in the long-term if the correct strategies are followed.
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In addition to knowledge of basic trading procedures, day traders need to keep up on the latest stock market news and events that affect stocks—the Fed's interest rate plans, the economic outlook, etc. So do your homework. Make a wish list of stocks you'd like to trade and keep yourself informed about the selected companies and general markets. Scan business news and visit reliable financial websites.