Day trading

A holding period, and nothing more than a holding period. A day trader's positions are opened and closed inside one trading day, so the account finishes the session flat. The label describes when contracts are closed. It describes no method for deciding what to open, no instrument, no timeframe on a chart and no level of experience, which is why two accounts described the same way can have nothing else in common.

The day that matters is the provider's, not the calendar's. A position is overnight once it is still open at the daily cut off, the point at which overnight financing is applied, and that cut off falls at a stated server time rather than at local midnight. A contract opened late in one session and closed early in the next has been held overnight even though it lasted under an hour.

The arithmetic that follows the label is the part most often skipped. Closing inside the session removes the financing adjustment, and it multiplies the number of times a full round turn is paid, because every position pays the spread and any commission twice. Cost per trade is a fixed quantity while the distance price travels in a session is not, so the shorter the holding period, the larger cost looms as a proportion of whatever the position produces.

Practitioners disagree about where the boundary sits. One convention treats any position closed before the cut off as day trading, including one held for most of the session. Another reserves the term for accounts turning over many positions a day and files the rest under swing trading. Neither definition is authoritative, so the word carries whichever meaning the person using it has in mind.