Types of trading
INTRODUCTION-:
Trading is a fundamental part of the financial market that allows individuals to buy and sell financial assets to generate profit. whether you are beginner or experience trader, it’s very important to know and understand different Types of trading and strategies. so that you can choose one particular style of trading and make profit for long time in stock market. Because every experience trader follows a particular style of trading. That’s why they always make profit.
From short-term strategies like day trading and scalping to long-term approaches such as swing trading and position trading, each style has unique pros and cons. Traders can explore their one particular trading style as per their ability and comfort.
so, in this blog, we will divide stock market trading styles into different categories to its advantage and disadvantages, their key feature, and potential risks, helping you make informed decisions in your trading journey.
Different types of trading
1. Scalping: –
This trading strategy involves buying and selling stocks, indices, commodities, currencies, and cryptocurrencies to make a profit by capturing small price movements very quickly in the market, rather than waiting for large movements. Consequently, traders execute multiple trades throughout the day.
Moreover, in this strategy, profits are generated by capturing small movements while entering positions with a huge quantity, typically ranging from 1,000 to 10,000 or more. As a result, even minor price fluctuations can lead to significant gains.
Key points: –
- To exit and enter in trade within seconds and2,3 and 5 minutes time frame.
- To enter in trade with huge quantity. It may be 1000 to 10000 thousand.
- Multiple trades in one day.
- Probability to make high profit within some seconds and some minutes.
- Probability to lose huge amount within seconds and minutes.
- Quick decision for entering and exiting.
- Analyzing market on the basis of charts, indicators, candles and price action.
2. Intraday trading: –
This is a trading strategy in which traders sell and purchase assets (such as stocks, indices, commodities, currencies, and cryptocurrencies) within a single day. Typically, they execute their trades at the opening time of the market and, subsequently, close their positions at the market’s closing time on the same day. As a result, they aim to capitalize on short-term price movements while avoiding overnight risks.
Key points: –
- sell and purchase of stocks for one day.
- analyzing market on 5-, 15- and 1-hour time frame.
- executing trade in liquidity stocks.
- entering in market with normal quantity
- less risky compared to scalping trading.
- use charts, candles and price action for market analyzing.
3. Buy today sell tomorrow (BTST): –
The Buy Today, Sell Tomorrow (BTST) trading strategy is when a trader buys a stock today, holds the trade overnight, and then sells it the next trading day. Consequently, this strategy allows traders to capture a good momentum over one day, taking advantage of short-term price movements.
Key points: –
- Buy a stock today and sell it the next trading day before settlement.
- Aims to profit from overnight price movements.
- less risky compared to intraday trading.
- duo to good news in overnight you may earn unexpected profit.
- duo to bad news in overnight you have to beat unexpected loss.
- easy to read charts, candles and price action compared to intraday trading.
4. Swing trading: –
Swing trading is a trading strategy where traders buy and hold an asset for a few days to weeks to profit from short- to medium-term price movements. Unlike intraday trading, swing traders do not close their positions on the same day—they aim to capture “swings” in price trends.
Key points: –
- To capture trades from a few days to weeks, not minutes or months.
- Try to capture moves as per market trend bullish, bearish, or sideways markets.
- Analyzing market on the basis of charts, patterns, support/resistance, and sometimes news/events.
- No need to monitor the market all day, but still active for some time.
- To use stop-loss and target prices to protect capital.
5. positional trading: –
Positional trading is a strategy where traders buy and hold assets for a longer period, usually weeks to months, or even years. The goal is to profit from major market trends rather than short-term price movements.
Key points: –
- To hold trade for long period (weeks to months)
- To execute trades company performance, economic trends, and price charts.
- Try to capture big moves and trend market (uptrend, downtrend and sideways).
- Like all trading strategies, no need to monitor market every day.
- Lower transaction cost like brokerage fee.
6. Investing (long term investment):-
A long-term investment is the strategy in which traders and general public put their money in assets (stocks, crypto, currency, and bonds) for long term. This long term may be 1 years to 3, 5 and even 10 years. you don’t require to analysis any charts, candles and price action
you just have to choose a good stock and hold it for long term. Think of it like planting a tree—it takes time to grow, but in the future, it can give you shade and fruits! 🌱💰
Key points: –
- fundamental analysis of stocks, not chart, price action and candles
- analysis on the basis of gross profit ratio, net profit ratio, sales, stocks sector (health, IT, food etc.)
- 95 percent chances to make profit.
- very less risky compared to all other strategies of trading.
- no need to monitor of stocks every day.
