Day trading

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Dollar rate within a day

Day trading or day trading ( English day trading , literally ' day trading '; also intraday trading , English intraday trading , literally 'intraday trading') stands for short-term trading on an exchange using fluctuation ranges of stock exchange prices (see volatility ). Positions are opened and closed again within the same trading day - with the aim of benefiting from corresponding price fluctuations. Usually it is speculation with stocks , currencies or futures or derivatives . Intraday trading plays an important role for professional traders from banks, insurance companies and other institutional investors, but the term day trading often refers exclusively to intraday trading by private investors (day traders ) , which is mainly carried out via the Internet.

history

The origins of day trading can already be found in floor trading . The further development up to high frequency trading was promoted by the computerized exchange trading, which began in 1971 on the New York NASDAQ stock exchange. A small order system promoted the possibility of day trading in 1985. In the USA, day trading has also been allowed for private investors since 1996. It developed into a growth segment of stock exchange trading. In 2000, trading with private day traders already reached around 15% of daily share trades on the NASDAQ.

In Germany, special trading rooms have been created since 1998 in which private day traders could trade. In 2000 there were around 50 such day trading centers , but since then trading has mainly taken place via the platforms of various online brokers . On August 23, 2001, the German Federal Financial Supervisory Authority (BaFin) issued a code of conduct that also included obligations for securities service companies to inform day traders. It was repealed in 2007 due to corresponding changes in the Securities Trading Act.

Legal situation in Germany

The rules of conduct for investment services companies are described in sections 63 to 96 WpHG (obligations of conduct, organizational obligations, transparency obligations). A guideline for the specification of Sections 31 and 32 WpHG , which described the information obligations of financial service providers vis-à-vis day trading customers more precisely and provided that service providers must explain the risks of day trading and ensure that customers have the necessary knowledge to carry out such transactions repealed by BaFin on October 23, 2007. The law that has been in force since November 2007 has also expanded derivatives in securities law to include mere “financial differences ” ( Section 2 (3) No. 3 WpHG ) so that same-day transactions are also recorded. For this reason, the protective effects for financial futures transactions from Section 99 WpHG now also apply and the same damage regulations apply as for other financial futures transactions.

Risks

The risks of buying and selling on the same day are basically the same as with any other time horizon, although the trading costs and the trading margin form a considerable first hurdle, especially for private investors. The fluctuations in value within a day are lower for many commercial objects than over a longer observation period. In order to be profitable at all, positions often have to be financed by loans or leveraged in some other way , which increases the amount of potential loss. According to a US study from 1999, 70% of private investors suffer losses when day trading. This was confirmed by a 2000 study by the North American Securities Administrators Association , which , according to Forbes magazine , found that 77% of day traders would lose money. The average profit from the rest is said to have been $ 22,000 in eight months. Of the 124 monitored accounts, only two people reportedly made more than $ 100,000 in profit.

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

See also

Individual evidence

  1. ↑ Gambling under pointers . In: Focus-Money , No. 48/2000, November 23, 2000, p. 156. Retrieved May 2, 2019.
  2. ↑ Day trading is only suitable for a few private individuals . In: wallstreet: online , accessed on May 2, 2019.
  3. ↑ Guideline pursuant to Section 35 (6) of the Securities Trading Act (WpHG) to specify Sections 31 and 32 WpHG for commission business, proprietary trading for others and the brokerage business of securities service companies of 23 August 2001.
  4. ↑ Repeal of the Code of Conduct, the Compliance Directive and the Employee Guidelines. BaFin, circular, October 23, 2007.
  5. ↑ BaFin: Repeal of the Code of Conduct, the Compliance Directive and the Employee Guidelines , accessed on June 29, 2015.
  6. ^ Die Bank , 1999, p. 732.
  7. ^ Michael Maiello: Day Trading Eldorado . In: Forbes , June 12, 2000, accessed May 2, 2019.