Author: Abhinav Mishra, BBA.LLB Student at Amity University, Lucknow
Co-Author: Dr.Arvind Kumar Singh, Assistant Professor at Amity University, Lucknow
ABSTRACT
The rise of day trading culture has significantly transformed global financial markets, attracting millions of retail traders who seek quick profits through frequent stock buying and selling. This research paper explores the growing obsession with day trading and its consequential impact on stock market volatility. The study delves into the legal, regulatory, and economic implications of this trading phenomenon, particularly focusing on how modern technology, social media, and zero-commission brokerage platforms have fueled its rapid expansion.
The paper begins by providing a conceptual framework of day trading, highlighting its characteristics, evolution, and psychological aspects. It then examines the legal and regulatory landscape governing day trading, analyzing the role of financial regulators such as the Securities and Exchange Board of India (SEBI) and the U.S. Securities and Exchange Commission (SEC) in monitoring speculative trading behavior, enforcing margin regulations, and curbing market manipulation. The research further investigates how regulatory gaps may expose retail traders to excessive financial risk and contribute to broader market instability.
This paper focuses on the impact of day trading on stock market volatility, drawing from empirical studies and case analyses of extreme price fluctuations triggered by retail trading frenzies, such as the GameStop short squeeze of 2021. The study also compares India’s regulatory approach with global jurisdictions like the United States, United Kingdom, and European Union, identifying best practices in day trading governance. Additionally, the research explores the ethical and socio-economic consequences of the day trading culture, including financial risks for amateur traders, psychological stress, and the potential for market manipulation.
The paper concludes with policy recommendations aimed at striking a balance between market accessibility and investor protection. These include strengthening legal frameworks, increasing financial literacy, and leveraging AI-driven monitoring tools to detect manipulative trading practices. As day trading continues to evolve in the digital era, this study underscores the need for proactive legal and regulatory interventions to mitigate systemic risks while ensuring fair and transparent market participation.
Keywords: Day Trading, Stock Market, Market Regulations, Retail Investor, Trading Psychology.
