In stock, cryptocurrency and other markets the prices of assets tend to change continuously during the day under the effects of the market forces of supply and demand. Most of the time, especially in the less volatile environments, these fluctuations are too small to be a concern to long-term investors. However, there is a category of market participants who actively try to extract a profit from these movements called day traders.
The activities of a day trader involve trying to predict the short-term price actions of the assets they are trading in in order to make favorable buy or sell deals. This is a high-risk, high-reward activity due to an immense number of factors affecting intraday price fluctuations, some of which are hard or impossible to evaluate.
Day traders employ different tools and techniques to conduct the best trades that they can. Some try to analyze the price history of an asset in order to find price chart patterns that might repeat themselves in the future — a practice known as technical analysis. Others develop or purchase trading software that uses computing power to analyze current market data and conduct trades automatically. Others still trade based purely on instinct.
The cryptocurrency market, with its infamously high volatility, provides an exceptionally risky but potentially lucrative ground for day traders. When assets’ prices quite often change by 10% or more within a single day, both the profits and the losses can be significant.