What is Day Trading? A Simple Explanation for Kids, Teens and Beginners

What is Day Trading? Stock Market 101: Easy Peasy Finance for Kids and Beginners

Introduction to Day Trading for Kids and Teens

This video explains the concept of day trading in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about day trading, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

What is Day Trading - A Simple Explanation for Kids Teens and Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

What is day trading?

Day Trading for Kids Teens and Beginners - A Simple Explanation
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Day trading is when people buy and sell the same securities during a single trading day with the intent of making a profit.

This can happen in any type of financial market, but is most common in the stock market.

An example of day trading would be if I bought Amazon stock at 10:00 AM, then sold it at 12:30 PM on the same trading day, because the stock price went up.

Day traders try to time the market and take advantage of price fluctuations through different strategies to make a profit.

What strategies do day traders use?

One of the most popular strategies in day trading is looking at the news.

If a company is scheduled to report its earnings or other important news, and a day trader thinks the news will be good, and the company’s stock price will go up because of it, then they might buy stock in the company before the news is declared, and then sell the stock after the announcement – all on the same day.

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If the trader’s prediction is correct, and the stock price goes up, then the day trader could make a lot of money.

There are other strategies like swing trading, scalping, arbitrage etc that day traders use. We’ll cover them separately.

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So if I become a day trader, I’m guaranteed to make money / profit, right?

No. There is a common misconception that day trading is a type of “Get Rich Quick” scheme. That could not be further from the truth.

Although there is a possibility of gains, there is also a high possibility of making losses.

Plus, since you trade very frequently, you incur a lot of commissions. This means that even if you make a profit, the commissions eat into your gains!

This makes day trading very risky, and there is no guarantee of making gains.

Day Trading for Kids - Should You Become a Day Trader
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Is there any way for a day trader to make money even if the stock price goes down?

Yes. There is a strategy called short selling that lets a day trader make money even if the stock price of a company goes down.

But we have talked about short selling in detail separately.

Should I become a day trader?

No. Day trading is usually done by professionals with a lot of knowledge, experience and money. Despite that, they can still lose money!

So individual investors like you and me should avoid day trading.

But there is a much better investment strategy called Dollar Cost Averaging that can be used to make consistent returns in the stock market.

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

Podcast: What is Day Trading

What is Day Trading
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