A stock exchange is an organized marketplace where equity trading takes place. In recent years, it has been seen as a physical marketplace such as the New York Stock Exchange and London Stock Exchange. It is a mutual organization of stock brokers or a corporation.

Stock exchange is a marketplace for stock brokers and traders. It normally involves the selling of financial instruments such as stocks, stock options and future contracts. The trading of equity is normally made on a stock exchange.

Stock traders can engage in different types of stock trading transactions. One of the types of stock trades and perhaps the controversial one is the day trading.

Day trading is the practice of many stock traders specifically day traders to transact in the marketplace within the same trading day before the market closes. Buying and selling of financial instruments can be done within the same trading day where it may only last in seconds, minutes or a few hours.

The financial instruments that are commonly transacted by day traders include stocks, currencies, stock options, equity index futures, commodity futures and interest rate futures.

Day trading is practiced by financial experts and speculators. Knowledge of the marketplace is one of the attributes of a day trader. Thus, day traders are usually financial institutions such as banks and professional investors. Employees of investment firms are also day traders where they make it as a living. Speculators of the market have also been included in the list of day traders who are deemed gamblers in the marketplace.

The stock market is a highly volatile marketplace. Risks normally come in trading stocks which literally involves buying and selling stocks through stock brokers. Day traders can participate in several buying and selling transactions in day where some of them focus on short-term trading which may last a few minutes or in seconds. Many of them sell their positions before the market closes in the same trading day. This is to avoid the risk of price gap which refers to the difference of the following day’s open stock price to the previous day’s close.

Day traders employ different strategies in trading stocks. They include scalping, trend following, rebate trading, range trading and news playing.  Playing news is one of the most common techniques used by a day trader in buying a stock. Day traders may base their buying and selling decisions to reports, estimates of events or rumors.

Trend following is also taken by a day trader who practices this strategy by buying or short selling rising stocks with an expectation that the trend will optimistically continue.

Day trading can turn into huge gain or huge losses. There are persons that have become successful in day trading where they have earned millions of dollars from short selling stocks and buying stocks within the same trading day.

Nevertheless, it is important to note that day trading can also be risky. Although there are casual traders that take part in day trading, those that participate in day trading are professionals in the financial marketplace.

Aside from employing strategies, day traders are also prepared for the cost and outcomes of the day trading. Moreover, day trading is a kind of investment where it technically involves cost of trading equipment and brokerage commission.  Day traders also rely on market data and may use computers with fast internet connections and software programs.

Day trading is a risky business. Day traders should prepare for the possible losses that may incur during the trade. They normally use risk capital, which is the financial resource allocated by the traders and investors for trading high-risk securities. Risk capital can protect day traders from financial ruin. Sufficient capital is deemed necessary when engaging in day trading.