Day trading most commonly refers to the practice of buying and selling stocks (or other financial instruments) during the day such that at the end of the day there has been no net change in position: for every share of stock bought an equivalent share is sold. A gain or loss is made on the difference between the purchase and sales prices. A primary motivation of this style of trading is to reduce the risk of holding a position overnight (where the open price may have significantly changed from the previous day's closing price). Traders performing day trading are called day traders.
Day trading is not necessarily more risky than any other trading activity. However, the common use of buying on margin (i.e. using borrowed funds) amplifies gains and losses such that substantial losses or gains can occur in a very short period of time. Day trading also is very expensive, incurring multiple commissions and paying the bid-ask spread multiple times, as compared to a "buy and hold" strategy.
It is commonly stated that 80-90% of day traders lose money. An analysis of the Taiwanese stock market suggests that "less than 20% of day traders earn profits net of transaction costs" Barber, Brad M., Lee, Yi-Tsung, Liu, Yu-Jane and Odean, Terrance, "Do Individual Day Traders Make Money? Evidence from Taiwan" (January 2005). http://ssrn.com/abstract=529063.
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