Day-Trading

Overview

Day-trading, the practice of buying and selling the same securities in matching amounts through the trading day with the intent of ending up flat at the end of the day, is considered to be a risk practice for non-institutional customers. Accordingly, FINRA requires that and broker-dealer that is "promoting a day-trading strategy" (as defined in FINRA Rules 2130(e)) (i) make an assessment of the appropriateness of the strategy for any customer who intends to engage in day-trading and (ii) provide a risk disclosure statement to each of its customers.

Day-trading accounts are also subject to special margin requirements, but those are outside the scope of this topic page. In addition, day-trading is sometimes tied to other violations, including the misallocation of trades and churning of transactions.

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