Why is day trading illegal?

Day trading, a form of financial trading where positions are held for a short period, is generally legal when conducted within the regular trading hours and with proper documentation. This activity involves buying and selling financial instruments, such as stocks, currencies, or commodities, within the same trading day, aiming to profit from small price movements.

However, a related practice known as late day trading can cross the legal boundary. Late day trading, which involves executing trades towards the end of the trading day with the intention of influencing the settlement price, is considered illegal under commodities fraud law.

The reason behind the prohibition of late day trading lies in its potential to manipulate the market. By artificially inflating or deflating prices at the settlement point, traders can gain an unfair advantage over other market participants, thereby harming the integrity of the market.

Regulatory authorities worldwide closely monitor trading activities to ensure that they comply with the law. They impose strict penalties, including fines and imprisonment, on individuals or entities found guilty of engaging in illegal trading practices like late day trading.

BTCC, a leading cryptocurrency exchange, offers a range of services that cater to the diverse needs of traders. These services include spot trading, which allows users to buy and sell cryptocurrencies at the current market price, and futures trading, enabling traders to speculate on future price movements.