Is day trading illegal?

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asked Jan 13 in Investing by MattGomko (2,160 points)
Is day trading illegal?

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answered May 31 by Carebear (13,700 points)
Day trading is not illegal as long as the day trading is done within the normal trade hours and and as long as the day trading is properly recorded.

If the day trading is down outside of normal trading hours it can be illegal and get you into trouble.

While day trading is neither illegal nor is it unethical when done during the proper hours, it can be highly risky.

Day trading is one of the risky routes to the stock market which is the act of rapidly buying and selling stocks throughout the day in order to gain quick profits.

When day trading you have to be careful because your account will be flagged for pattern day trading if you make 4 or more day trades within 5 trading days, and the number of day trades represents more than 6% of your total trades in that same 5 trading day period.

This rule only applies to margin accounts and IRA limited margin accounts.

A study done by University of Berkeley found that 75% of day traders actually quit within two years.

The same study also had found that the majority of day trades, up to 80%, are unprofitable.

And while some day traders end up successful and make a lot of money, they are the exception rather than the norm.

The average income of a day trader can vary significantly.

Some day traders might make upwards of $200,000.00 a year, while others could lose money day trading.

Factors like the amount of capital invested, the strategy employed, and the markets traded can all impact earnings.

Day trading can be extremely risky, both for the day trader and for the brokerage firm that clears the day trader's transactions.

Even if you end the day with no open positions, the trades you made while day trading most likely have not yet settled.

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