Daytrading

Daytrading describes the speculative short-term trading in securities. These positions will be opened within the same trading day and closed again, already benefit with the aim of low price volatility. Usually it is in the objects of speculation thereon to stocks, forex or futures or derivatives.

History

The origins of day trading are closely linked to the development of the computerized exchange trading, which began on the New York NASDAQ 1971. A small order system promoted again in 1985 the possibility of Daytradings.

In the U.S., day trading is allowed for private investors since 1996. It has now developed into a Wachstumssegement of exchange trading. In 2000, the trade already reached with private day traders around 15% of daily equity trades on the NASDAQ.

Legal situation in Germany

The law in force since November 2007 has expanded the derivatives in securities laws to mere " Financial contracts for differences " (§ 2 para 2 No. 3 WpHG), so that even same-day transactions are recorded. Therefore now also attack the protective effects of financial futures transactions under § 37e of the WpHG and apply the same damage rules as with other financial transactions.

Duty to inform

The "Guidelines for the specification of § 31 and § 32 WpHG " states that financial institutions need to educate the customer about the risks of day trading and make sure that it has the necessary knowledge to carry out such transactions.

Risks

The risks related to same-day buying and selling of securities are basically the same as with any other time horizon. However, the value fluctuation within a day are much lower than for a longer time period. To be profitable to all, items have to be so often debt financed or leveraged, thereby simultaneously increasing the height of the potential loss.

Another critical factor in the short-term trading is the reaction time, both the human and the technical (transmission and processing times ). For this reason, the servers of the high-frequency trading systems are located close to the stock exchange.

According to a U.S. study thereby suffer 70 % of the private investor losses. This was confirmed by a study carried out in 2000 by the North American Securities Administrators Association, which found, according to the Forbes magazine that " 77% of day traders make losses. The average gain for the other was $ 22,000 for the period of eight months. Of the 124 monitored accounts only two people had achieved more than $ 100,000 profit. "