The person who is deeply involved in stock market investing knows what day trading is. To the outsiders, this kind of trading is that practice of buying and selling the financial instruments within one day. The transactions are then all closed at the close of the trading day. This shouldn't be confused with the after-hours trading.

In this kind of trading the most commonly traded instruments are the stocks, the stock options, currencies and other futures contracts.

This kind of trading can be differentiated from other mode of trading in terms of the trade frequency and the risks and profits involved. There are a number of trading styles that constitute day trading but all these sub-trading strategies are known in the market as day trading. In this kind of trading the day trader is always on the lookout for possible trading set-ups. And depending on the trading game or system, the number of trades that can be performed by the day trader will go anywhere from zero to a dozen trades.

Day trading is known for the many short trades within the day. Some trades may lasts for a few seconds and may lasts as well for a few minutes. The traders can buy and sell many times in day and may also receive trading fee discounts from firms and these are also known as the trading bonus. Day traders are known to focus much o price momentum and on price patterns.

For those who are involved in this kind of trading, it is imperative that all trades should be finished within the trading day in order to avoid the unmanageable risks or the negative price gaps. These are known as the price movements that can happen overnight. Traders who perform this kind of trading scheme follow some rough rules and guidelines. They believe that profits should run its course and it is acceptable to stay with a certain position after the market day closes. Day traders usually borrow money in order to make the trades in the day. This kind of trade is known as margin trading.

Day trading is known for its very high profits or very high losses. This kind of trading offers a high risk for investors because of the nature of financial leverage and the effects of rapid returns. So it will not come as a surprise when a day trader can earn his millions by doing day trading for the year. Day traders are known for their reputation as "gambler" and "bandits". This label was used to refer to the fact that these trades can make high profits at a certain trading day.

Simply put, this trading is a risky one and even more risky if the trader trades in the loser's system rather than the one that is winnable. This trade practice is also risky if the trader has poor discipline, has inadequate capital in hand and when the trader executes trades poorly. Usually day traders make use of many techniques in order to make profits. These techniques include trend following, contrarian investing, range trading, scalping, rebate trading and news playing.