Day traders buy and sell stocks throughout the day, hoping to cash in on quick profits when securities increase or decrease in value. Unlike the traditional method of holding stocks for long-term growth, day traders buy and sell stock within the span of one day, sometimes owning shares for only seconds or minutes at a time. Day trading is considered risky because it is possible to lose large amounts of money in a very short timeframe. It also is a practice often associated with get-rich-quick schemes.

Some day traders approach the practice like gamblers. Others, however, are professionals and are able to make a decent living as day traders. Successful day trading requires a keen understanding of the market and how it works, enough capital to withstand financial losses, and an overall investment strategy that makes it possible to beat the market.

While not considered illegal, day trading is governed by certain rules outlined by the New York Stock Exchange (NYSE) and the Financial Industry Regulatory Authority (FINRA). People who are considered true day traders are only allowed to trade in margin accounts that have minimum balances of $25,000. Like all broker-dealers, day trading firms are required to register with the U.S. Securities and Exchange Commission. Before dealing with any day trading firm, confirm the company's registration by contacting your state securities regulator to find out if the firm has had problems with regulators or other customers. You can locate your state's securities regulator by visiting the North American Securities Administrators Association (NASAA).

If you are considering engaging in the practice yourself or dealing with a day trading firm, spend some time reading up on the subject first. The U.S. Securities and Exchange Commission has published several helpful resources, including “Day Trading: Your Dollars at Risk” and “Tips for Online Investing: What You Need to Know About Trading In Fast-Moving Markets.”