Traders in the stock market use various trading strategies and trading styles based on the understanding and working of the stock market. One can use various trading strategies for other trading procedures in the stock market, but one needs to check and see which one suits him the best.
In the ever-growing financial world, several new things are being added to the world of trading, and thus traders have now got more options to choose from to trade in stocks.
In addition, a trader can use any trading style as per the needs. Before getting into the stock market, traders need to check all types of trading and see which trading style works best for the system of the specific trader.
But before diving into the topic of the different types of trading, get a solid understanding of the working of the stock market. Join a good stock market institute like The Thought Tree (T3) if you plan to invest and start. A good stock market course will help you understand how a stock market works and how you can maximize your profits.
Types of Trading in the Indian Stock Market
1. Intraday Trading
In Intraday trading, the trader purchases and sells stocks on the same day for getting profits. The trader won’t have to take the delivery of shares on the same day itself.
It means that if one puts out the stock to sell or purchase it, through that one can get the benefit of the stocks which is going up and close the position till the end of the trading day and make sure that there are no stocks left to be traded for the next day.
If you are an intraday trader, you will have to look out at various aspects for getting good returns. Intraday trading is volatile, and one needs to make a quick decision. The traders need to be active and check on by tracking the stock market’s movements daily. Intraday trading is not for novice investors because a high-risk factor is involved.
2. Swing Trading
Swing traders want to keep the stocks for more than one day for getting extra momentum in the cost of stocks. The main difference between day traders and swing traders is keeping the stock.
Swing trading is just like position trading; the one difference is that the position is not kept open for more than a few months. Swing traders trade for getting the most from a movement of the underlying stock. The risk involved is high, but it is not as high as it is Intraday. A trader should have a good idea to know if the trend is upside or downside and then trade in stocks to make a good profit.
3. Positional Trading
In positional trading, the stock holding period is a lot, and it could span a couple of months and some years. Positional traders expect a huge price movement in the long run in hopes of making a large profit. Their trading decisions are based relatively on technical and fundamental analysis.
In positional trading, the trader won’t have to monitor a lot. This kind of trading is for working professionals who can’t invest a lot of time in trading but still want to get good returns. Positional trading doesn’t have a lot of risks involved as the period is longer than swing trading.
4. Momentum Trading
In momentum trading, the trader finds a stock breaking out and then moves to keep the momentum on the stock up or down as seen in the market. In upward momentum, the trader sells or purchases the stocks and thus gets good returns and in downward momentum, the trader buys a lot of stocks to sell them when the stock price shoots up.
5. Technical Trading
In technical trading, traders have to do a lot of technical market analysis. The traders make the most of their technical analysis skills for finding a change in the Indian stock market price. The stock prices are dependent upon the demand and supply of the stock. In technical analysis, the market view is the most important for finding out the stock’s price.
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Final Word
So to wrap up this topic, I hope that this article was helpful to you. Now, you know the different kinds of stock trading techniques that can be used in the market. Remember that each investor has requirements as it varies and depends on the money they choose to invest in the stock market. There is nothing like the best trading style in the stock market, as there are many factors involved in all types of trading.
Happy trading!