In the stock market, you will see various types of trading and Investments. Every type of Trading and Investment has its own style and feature. Stock market traders choose any trading strategies based on their financial goals. If we see broadly there are two types of trading which are short-term and long-term and categorise the form of trading based on the Time Frame.
Based on time frame:
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Scalping trading
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Day Trading
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Swing Trading
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Positional Trading
Based on Assest Class
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Equity Trading
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Derivative Trading
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Currency Trading
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Commodity Trading
Scalping Trading:
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Scalping trading is one of the shortest types of trading in the stock market. It is even shorter than Intraday Trading.
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The time Duration of scalping trading is between 4-5 Minutes.
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In Scalping Trading, the Trader enters and exit quickly from the market in order to earn profits. In this trading method, the profit ratio per trade is very low. But traders perform multiple trades in order to earn maximum profits.
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Scalping trading is one of the toughest and most risky types of trading in the stock market and it is mostly performed by experienced traders.
Day Trading
Day Trading is also known as Intraday Trading. It is a type of trading in which traders buy and sell the shares on the same trading day. In intraday trading, traders cannot hold the shares for more than one day. This means traders need to close the position before the market hours, otherwise, those stocks are automatically going to square off by the broker before the market is going to close.
If you want to start intraday trading then you can also refer stockdaddy free self-learning stock market technical analysis course video where you learn how to study the stock market and strategies to start intraday trading.
But Traders also have one option to hold their intraday stocks by converting their intraday stocks into position and this can be possible before 3:15 pm only.
Swing Trading
Swing trading is the type of trading strategy in financial markets that involve holding a stock for more than one day. Traders hold the shares In the hope of profits in next coming Days. Swing positions are often held for a long period of time compared to intraday trading. There is no fixed time period for holding stock in this trading.
Swing Trading minimizes the risk by holding the position. While performing swing trading it is very important for the trader to analyse and understand the price trend in the market.
Positional Trading
It is a basic trading strategy that is completely vice-versa of intraday trading. That helps traders to hold positions in the market for a longer period of time. Positional trading can be performed by using technical and fundamental analysis. Positional trading can offer High returns and the Risk ratio is very less. But positional trading required high research before buying any stocks.
If you are a beginner in the stock market then you have to start learning from stock market course for beginners to start positional trading.
Based on Asset Class
Equity Trading
Equity Trading means buying and selling company stocks. Equity trading can be performed by your registered trading account only. The majority of equity-related buying and selling of publicly traded shares over the counter or on a stock exchange.
Derivative Trading
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Derivatives are contracts whose value is derived from an underlying asset. Stocks, currencies, and other assets are some of the few examples of underlying assets.
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Derivatives are very volatile than the underlying assets and allow traders on speculating on the future price movement of the underlying assets.
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Derivatives trading is risker than equity trading, future and option trading are the two most frequent types of trading in derivatives trading.
Currency Trading
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Currency trading is also known as Forex trading. It is the type of trading in which traders buy and sell currency pairs. Currency is commonly traded, USD and EUR are the most liquid currency pair.
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USD/JPY, USD/GBP, USD/CHF, USD/CAD, AUD/USD, NZD/USD, and USD/INR are some of the other popular currency pairs.
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Forex trading is open 24 Hours which is a huge advantage for the traders.
Commodity Trading
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Commodities are commonly traded assets just like stocks and currencies.
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Metal, agriculture products, and energy are the main types of commodity trading
- Gold, Silver, Platinum, Aluminium, and Copper are some examples of metals.
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Crude Oil and natural gas gasoline are some examples of Energy.
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Corn, wheat, rice sugar coffee, and cotton are a few examples of agriculture and commodities.
Conclusion
Every investor should know each trading style. If in case you are a beginner in stock trading then you need to start working on this and there are certain strategies on which these strategies depend on, you can learn stock market trading with stockdaddy stock market Basic Course. It is important to gain adequate knowledge of the stock market before starting trade because it plays a crucial role in your stock market overall journey.
