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I am looking for some vocabulary that describes the practice of buying and keeping stocks/shares for a short time and selling them to gain quick proft. It could be a compound noun. I am not sure.

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You're probably thinking of day trading or short-term speculation.

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You don't say what you consider to be short term, but in the U.S. there are a number of terms set by different regulatory bodies that may apply.

The broadest term for the practice is simply short-term trading or short-term speculation. The economist Joseph Stiglitz included among short-term speculators those who bought and sold "within the trading day, and within days or weeks." This is the term mutual fund companies tend to use when defining who will be charged short-term redemption fees, though the specific length of time will vary by fund company, fund family, and individual fund. The fees gained greater prominence in the early 2000s as a means to discourage rapid trading in mutual funds.

More common are the terms day trading, and less commonly swing trading. The concept of day trading became well-known during the Dot-com stock market bubble, and is for the most part covered by the Securities and Exchange Commission's definition:

Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day traders usually buy on borrowed money, hoping that they will reap higher profits through leverage, but running the risk of higher losses too.

A related behavior is swing trading, per Investopedia, short-term speculation that holds investments from one to four days, with buy and sell decisions often made based on technical analysis (studying market behavior) as opposed to fundamental analysis (studying companies and industries). This term is not nearly as popular as its intraday counterpart, however. Day trading and swing trading are contrasted with traditional buy and hold investing.

Since the Dot-com era, day trading has something of a negative connotation, and so brokerages and others will use the alternative term active trading and active traders. This term is also broader, as a security or other investment held for more than one trading day would not technically fall under the definition of day trading.

There is no industry-wide definition of active trading, with one online brokerage defining it as 15 trades in 3 months, for another it is 4 trades in a week, and for yet another it is 10 trades per month according to the linked article. For its part, the Financial Industry Regulatory Authority (FINRA) defines a pattern day trader as

any customer who executes four or more day trades within five business days [unless] the number of day trades is 6 percent or less of total trades for the five business day period

(this was the definition used by both of its predecessor organizations, the NASD and the regulatory arm of the NYSE).

And of course, the above only applies to securities. On the regulatory side, other instruments and derivatives follow different guidelines. The Chicago Board Options Exchange, for example, defines a short-term option as index and equity options that are listed for trading for "approximately one week."

The Internal Revenue Service draws a distinction between investors and traders, where the latter exhibits three traits (IRS Tax Topic 429):

  • You must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation;
  • Your activity must be substantial; and
  • You must carry on the activity with continuity and regularity.

Outside of federal taxation, however, trader does not on its own carry this denotation, and I would not use it. And of course, outside the U.S., the regulatory definitions would not apply; you would need to consult the relevant authority.


Now, the above terms are applied to so-called retail investors, individuals who are trading their own funds (or with personally secured margin) on their own behalf. Institutional investors, those who trade on behalf of a company or other people, would not generally be referred to as a day trader or active trader, even though they may move in and out of investments in the short-term. For one, they are professionals who must be licensed, and for another, as the number and value of transactions and investments are higher, they would not meet the retail definitions.

But at the institutional level, there is the modern phenomenon of high-frequency trading. In HFT, a security may not only be held for less than a day, but may be held for only a few milliseconds at a time, with rapid trades conducted by automated software. HFT arose in the aftermath of the 2008 collapse of Lehman Brothers, encouraged by the exchanges to increase liquidity and enabled by ever-more powerful computers, and has become the subject of intense press scrutiny over the last few years.

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flip

transitive verb

  1. to buy and usually renovate (real estate) so as to quickly resell at a higher price

Flipping a stock is a common expression for selling it for a quick profit.

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