Types of Stock Trading

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Stock markets have become a significant avenue to generate additional income. Various types of stock trading are becoming popular in the stock market. There are numerous types of trading in India. Traders tend to select trading strategies based on their financial goals and the period for which they want to invest. Most brokers have launched their mobile apps and easy-to-use trading platforms that feature a wide range of information for traders. One can explore various trading types in the stock market to get the best out of their trades. Beginner traders are generally confused about how many types of trading there are in the stock market. Broadly, there are two forms of trading: long-term & short-term. Based on investment strategies, there is technical and fundamental trading. And based on the period, the types of trading are - intraday, swing, and positional trading. This article elaborates on the aforementioned types of trading in the share market.

  1. Intraday Trading

    Experienced traders who can dedicate a significant amount of time to trading can benefit from the intraday trading strategy. Also called day trading, it involves taking a position and squaring it off on the same day. Intraday traders seek to generate profits from small price movements. Therefore, it is critical for intraday traders to constantly monitor the stock markets and look for trend patterns and reversals. Since the strategy requires traders to make quick entry and exit decisions and analyze the trends swiftly, it is recommended that intraday trading should be practiced by experienced traders who hold strong expertise in assessing the markets.
  2. Swing Trading

    A swing trading strategy comes in picture when traders intend to capture profits from short-term trends or swings. Such trading requires traders to have a thorough understanding of the price trends in the market. Identifying the right entry point can help traders ride a bullish wave and make substantial profits.
  3. Positional Trading

    Positional trading involves holding on to a trade for a long period ranging from weeks to months. Traders with a long-term view may enter positional trading to benefit from long-term price movements. The positional trading strategy is used extensively in bullish markets. One cannot benefit from this strategy in a sideways market. Positional trading requires research and study before purchasing the shares of a company since it involves holding the shares for the long term.

 

Other than the above types of share trading, short selling is another trading technique practiced by traders with a bearish view of the markets. Such traders typically sell shares that they do not own. The trader believes the stock prices will take a hit, and they can purchase the stock at a lower price later. Short selling also bears risk as in case of a bull run, trader would still have to purchase the securities at a much higher price to return to the broker, thereby incurring a loss.

Conclusion:

Trading in the stock markets can lead to substantial wealth generation. There are different types of trading in the stock market which a trader can opt for basis their financial objectives, orientation towards stock trading, and the period they are willing to invest. However, stock market investments are exposed to risk. It is recommended that investors know the stock market's basics and understand how many types of trading are there in the share market before making any investment decisions.

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