The term Day Trade, or, Day Trader is a reference to a person who will leverage large amounts of capital in return for generally a small return and close the position out by the end of the day.

In general, if a trader has a large amount of capital invested into one of the larger Share Broking Companies, they will be allowed to invest more than the capital that they have into a stock, or, stocks on a daily basis as long as the position, or, the shares are sold by the end of the trading day. If there has been a profit, all well and good. If there has been a loss at the end of the day, then the trader must have sufficient funds to back this loss up, in his or her account.

In my experience of day trading, I'm probably about even, or slightly ahead.

Lessons to be learnt are:

Make sure the stock you are holding has sufficient daily turnover so that your broker is able to exit it at any time in an emergency run down of the stock.

For example, if you are investing on a day trade say $100,000. The stock should have a daily turnover of at least two to three million dollars so that when you do exit then your $100,000 investment doesn't effect the price dramatically. Of course, your broker would possibly only offer your stock back in say $20,000 allotments until the $100,000 is completely cleared, but, as I said, if there isn't sufficient turnover then your $100,000 could dramatically effect the price, particulary if there is an avalanche of selling.

Mostly though this wont be a problem as Day Traders usually spot a stock that's rapidly moving and will all jump on it likes bees to honey.

This is where you should be very careful at the same time. Day Traders can manipulate the price and cause huge panic in the stock, for their own advantage. For example, if the stock has run from say 50 cents to 56 cents in a few hours, day traders can put a risky false offer of a larger amount than what has been trading up for sale at say 58 cents to try and spook the market to rapidly sell. As quickly as the offer has been placed there, it is removed when selling downwards occurs enabling this trader to take advantage of a lower price.

On the other hand, the same tactic can be applied to get the price to move upwards. That is if the stock is trading at say 53 cents and there has been a bit of a lull in buying and selling of the share, then a day trader may put a buy offer of a huge amount of shares in at say 51 cents, invigorating the share once more into action as it gives the share traders confidence that the stock has underlying buying support.

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