Which trading style is characterized by making several trades within a single day?

Prepare for the CMT Level 2 Exam with our quiz. Study with flashcards and multiple choice questions, each with hints and explanations. Get ready to excel on your path to becoming a Chartered Market Technician!

Day trading is characterized by making several trades within a single day, focusing on short-term price movements. Traders engaging in this style typically aim to capitalize on intraday fluctuations in the market, entering and exiting positions within the same trading session, often holding them for just a few minutes to hours. This style requires a significant amount of market knowledge, quick decision-making, and the ability to react rapidly to market changes.

Swing trading, on the other hand, involves holding positions over several days to capture short- to medium-term price movements. Position trading involves holding trades for an extended period, from weeks to months, based on long-term trends or fundamentals. Finally, the buy-and-hold strategy focuses on long-term investment without frequent trading, often disregarding short-term market fluctuations. Thus, the defining characteristic of day trading as a trading style is the focused attention on executing multiple trades daily, responding to immediate market conditions.

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