Do You Have to Sell Short to Be a Day Trader?

Selling short means that instead of buying a stock to hold or sell in a traditional format, you enter a "sell" or "short" position and "buy to cover" when the stock's price falls. You don't have to trade short to operate as a day trader. Being a day trader simply means that you routinely open and close trades within a single day.

Day Trade Basics

From a regulatory standpoint, a day trader is someone that makes four or more day trades within a rolling five-day period. To maintain an account with day-trading privileges, you must have at least $25,000 in equity. If you made four day trades within the five-day period and don't have this minimum balance, you must hold stocks overnight to avoid day trade transactions. If you do maintain the minimum balance, you can trade on margin, which means that you can borrow an amount equal to your account's equity for trading.