Definition

1. : A day trader
   Day trader
   A day trader is a trader who buys and sells financial instruments within the same trading day such that all positions will usually be closed before the market close of the trading day. This trading style is called day trading...
   
    who makes trading decisions based on market
   Market
   A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
   
    volatility
   Volatility (finance)
   In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...
   
    resulting from news or incidents happening in the course of a trading day
   Trading day
   In business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2008, open from 9:30 AM Eastern Time to 4:00 PM Eastern Time. Trading days never take place on weekends. When a trading day ends, all share trading ends and...
   
   .
2. (technicals-based): A day trader
   Day trader
   A day trader is a trader who buys and sells financial instruments within the same trading day such that all positions will usually be closed before the market close of the trading day. This trading style is called day trading...
   
    who makes trading decisions based on the market
   Market
   A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
   
    being perceived by the trader as being higher or lower than expected.

Event based momentum trader

When the news breaks out, the market will usually become very volatile

Volatility (finance)

In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...

. The markets for affected stock

Stock

The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

s and other financial instruments generally swing a lot starting the moment the news comes out and potentially lasting for a few hours. During this time momentum traders try to make money making very rapid trades based on the values of those financial instruments fluctuating wildly. They need lightning fast execution to enable them to grasp these opportunities; the difference between success or failure may be determined in just a second. A delay of seconds to minutes, as is common in traditional online trading, would therefore not be acceptable to such traders.

Technicals based momentum trader

Technical analysis

Technical analysis

In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate technical analysis, which being an aspect of active management stands...

 is the prediction by a day trader of a certain financial instrument being temporarily:

• higher than it should be, in which case the day trader can make money by shorting now and buying later;
• lower than it should be, in which case the day trader can make money by buying now and shorting later.