Generally, finance professionals define a day trading room as a space where multiple traders engage in day trading of stocks and other financial products. The day trading room has evolved from a historic part of the “open outcry marketplace” to an electronically connected office where individuals often use advanced technology to make trades. Different kinds of day trading rooms are set up to serve the purposes of a specific company or other party.
In past times, the trading room has also been identified as a “dealing room,” or “trading floor.” The idea is the same; a day trading room will typically have several desks as well as an open space. Traders will use computers and software to track, buy, and sell stocks or other items, while communicating as appropriate.
Types of day trading rooms vary from those that are set up by an investment bank or other classical finance institution, to others set up by market teaching firms or other parties. In classic investment bank trading floors, for example, two types of professionals have been known to share a room. Conventional traders are engaged in buying and selling stocks, while “market makers” pursue different kinds of transactions.
What makes a day trading room unique is that the trading going on inside has been designated as short term trading activity. Day trading is an inherently risky activity that is often pursued by firms with immense capital, so it makes sense that day trading rooms accommodate a range of traders, and combines office space efficiently. When a company employs several bright people with knowledge of financial sectors, that company can often experience a net profit from taking short term trading risks. For that reason, experts warn single investors that this kind of trading is not often profitable for those with a lower amount of assets.
Traders in a modern day trading room will often have a range of software and tools available to them. They will usually have market-connected software for tracking real time prices of stocks and funds. They may also have proprietary communications tools. Another common tool for those in a day trading room is software that uses algorithms to predict values, which can give a trading room an edge in a volatile market.
While trading can go on in individual spaces, a day trading room fosters open communication between traders, and creates an energetic psychological environment as well. Companies may choose to house their traders this way for a variety of reasons. Day trading rooms can also facilitate training when high staff turnover exists in a finance firm.