Day Trading

Financial securities, financial commodities and other such
fungible items are traded in financial market. Transaction costs
are comparatively low in such market. Moreover, prices of these
items reflect their supply and demand as well. In financial
securities, items such as stock and bonds are usually included.
On the other hand, precious metals or agricultural products are
part of financial commodities.
Economics however, defines market as aggregate of sellers and
potential buyers of a specific item or certain service and
transaction that takes place between buyer and seller. It means
there are three main components to form a complete market
body. Those are sellers of the item or service, buyer of the
item or service and transaction that take place between these
two parties. Such transactions usually involve exchange of a
particular item in return of money, or other item / wealth.
However, sometimes term market is used strictly to refer
exchanges or organizations that work in order to facilitate
trading of financial securities or financial commodities. Various
stock exchanges and commodity exchanges are great examples
of such organizations. These organizations can either be physical
or electronic systems. Examples of physical locations are NYSE,
BSE and NSE. They can also be electronic systems without any
physical existence and NASDAQ is the greatest available
example for demonstrating such system. Most of the trading
related to stocks and bonds usually take place at exchange.
However, corporate actions such as merger and spinoff take
place outside or without a stock exchange. Moreover, if one
company decided to sell their stock to other one with their
agreement, there will be no requirement for stock exchange in
such initial transaction.
Most trading of currencies and bonds are usually based on
bilaterally. There are still many people who prefer to use stock
exchanges as medium for trading, buying and selling stocks. On
the other hand, there are also some people developing
electronic systems that serve the same purpose as a physically
existing stock exchange does.
Day trading is an important concept or say component of
stock exchange and trading. In upcoming chapters, various
aspects related to this concept will be covered with deep details.