Fascinated by stock markets and want to start trading? Wish to enter the dynamic stock trading world? If yes, as an amateur you must know the range of opportunities that exist in the Indian stock market.
As a beginner, it becomes really essential for you to learn the basics and types of Stock trading that exist in the stock market. Understanding the existing trading styles and adopting the one that suits our personality is necessary to become a successful trader.
So, before you take a step forward, it’s really important to take a minute and educate yourself about the different types of stock trading that are prevalent in India. Analyze your financial goals and decide which trading strategy suits you.
Highlighting some of the most popular stock trading styles. See and decide for yourself, what kind of stock trader you are?
Types of Trading in Indian Stock Market:
A scalper does not let the profits run. Instead, he takes as many small wins as possible and gets out fast before the trade can turn against him. Scalping sacrifices the size of the wins but massively increases the ratio of winning trades to losing ones.
Here’s the scalping mantra, in a nutshell:
- Take fast moves for fast gains.
- Make dozens or even hundreds of trades per day.
- Accept a tiny profit position
with stock scalping, for instance, a trader might close a trade with a less than 1 percent move. Get in and out of trades quickly –a scalp investor may spend just 1 or 2 minutes in the market.
2. Intra-Day Trading:
In intraday trading or day trading, the trader buys or sells stock on the same day. The day traders book profit or loss quickly and close their trade before the closing hours of the stock market. The stocks can be held for a few hours or a few minutes and can be traded multiple number of times in a single day. Mostly beginners or amateur start with intraday and day trading and end up with loses.
This aggressive style of trading is meant for active traders who can take quick actions by tracking the stock market movements regularly. Intraday trading is not advisable for beginners due to the high amount of risk associated with it.
3. Swing trading:
Swing traders wish to hold stocks for more than one day to capture additional momentum in the price of stocks. They try to predict short term fluctuations overnight. The prime difference between day traders and swing traders is the time frame of holding the stock. Most of the technical traders you might have known come under this category. Swing traders buy near the low and sell near the high and vice-versa.
4. Positional Trading:
In positional trading, the stock holding time period is quite longer stretching over a few weeks to months. Positional traders anticipate big price movements over medium to longer period in expectation of a large gain.