Types of Trading in the Stock Market. -

Today we see trading name is on the mouth of everyone. Its become fashion to say that I am a trader. But many of them even don’t know what trading means and what are the types of trading. But to solve that we written content for you where you will get complete knowledge of trading and types of trading. Let’s discuss them in detail.

Trading :

Trading is we can say exchange of goods and services and this is happening from ancient times. Now with exchange of goods and services money is used and we call it trade. In the same way buying selling of stocks in the stock market on the stock exchange is called Trading. So, here we are talking about trading of stocks.

Types of Trading :

There are many ways of trading and investing in the stock market. Let’s discuss. Mainly these are five:-

Long term investment.
Positional trading.
Swing trading.
Intraday.
Scalping trading.

Now lets discuss one by one in detail.

1. Long term investment :-

It is the type of investment where we invest in the company for years. In this people invest in the business after studying the financials of the company. Here company’s growth matters.
After investment here we have to hold the shares for many years and sometimes decades.
Here compounding works well. Here an individual needs to be patient. He/she not to churn after buying the shares. It is the type where focus is just on wealth creation and we invest only that money which we do not require in the near future.
It has the advantage that money is get saved and also gets a chance to grow in the long term. Where it has disadvantages that it needs a big patience level.

2. Positional trading :-

It is for less time horizon than investment. Here our holding time period is 1,2,3 or sometimes 4 months depending on the market. Here you need less patience than investment . It is basically done on the basis of technical analysis more than fundamentals.
Here we made positions because we find something in the stock that can lead it to big returns 25–50% and sometimes more. Here also we need patience and not need to churn daily with small moves. Here Stop Loss maintaining is important to save the big wealth destruction.
It has an advantage that one don’t need to wait for so long like investing, but also it has disadvantage that you get these opportunities in trending market only.

3. Swing Trading :-

It is for a very short period of time like 3 days to 3 weeks. It is used to play the swing of the stock when it is on support or breakout. As per history every stock moves only 20% times and the rest 80% times it only consolidates. So to use that move we do swing trade.
Here we don’t need to wait so long. We just use the swing for short targets like 10–15%. Here Stop Loss is also small as compared to Positional trade. Here a trader needs to track the stock regularly to see its movement. Respecting Stop Loss is so important.
It is the best method in all because you don’t need to wait long and also not need to sit in front of screen all day like Intraday.

4. Intraday :-

Intraday is the way of trading where buying and selling of stocks is settled within the single day. Here stock is not held overnight. It is the method where people should trade with some experience. It is quite a difficult method as per its volatility and good according to patience.
Here one needs to make a quick decision within the same day. Here individual remains on toes all day. It should not be tried by beginners according to us.
But what is happening today is every newcomer starts with intraday in quick rich expectation. But it is not the place to become quick rich. It makes you wealthy. In intraday Target & Stop Loss is very small. It is just some points that depend on stock to stock.

5. Scalping Trading :-

Scalping trading we personally call it 5min trading. Here individuals take trade for five minutes. In those five minutes whether it’s profit or loss they will take it and exit.
It is the very risky and most difficult type of trading. Here we need a very quick decision and experience to see the setup. It should be avoided by the newbie.
It has an advantage that if you understand it then you will be able to trade very fast. But on the other hand in this sometimes we have to wait all day just to find our set-up.

Which is best type of trading :

The market is the place where everything works. We just need to find out what works for us. All are best if you can understand that and earn money with that with proper emotion management. If we talk best for then the method on which you have the best emotion management is best for you.

Some can hold for decades and some can’t hold it for day. So everything is best if you can do proper management without churning.

Conclusion :

If we come to conclude then do not focus on all these and also don’t try to learn all. These are just theoretical methods. Every method has its own advantages and disadvantages and their importance.

I personally do Swing and Positional according to market trend. Investment I do through Mutual Funds only because here you can invest and forget. It is managed by a professional fund manager.

This all is just for study purposes. Choose according to yourself.
Thank You
Happy investing🙂🙏