Trading is the process of buying and selling securities. There are different trading strategies involving different market environments and inherited risk.
Let us discuss some of the trading strategies which are most popular among the rest and can help investors to make rational investment decisions.
intraday trading
Intraday trading also known as day trading refers to the trading strategy where investors buy and sell securities on the same trading day. They close their trade before the closing time of stock market and book profit and loss.
Investors may wish to hold these securities for a few seconds, hours or even several times a day, so intraday refers to a highly volatile trading strategy and requires rapid decision making.
positional trade
Positional trading is a strategy where securities are held for a long period of time like months or years. They hope to make a profit by anticipating large price movements over time. Investors usually adopt this style of trading by placing their base on fundamental analysis as well as technical ones.
Therefore, this type of trading strategy usually ignores short-term complexities such as market trends and volatility.
Read more: What are the types of trading accounts? MintGenie explains
swing trading
Swing trading generally refers to a strategy where investors hold securities for more than a day in order to further accelerate the price of the shares. Swing traders are known for predicting overnight market movements and trends.
The time frame for holding a stock is a key difference between intraday traders and swing traders. That’s why it is said that most technical traders fall into this category of trading.
technical trade
As the name suggests, technical trading involves investors who use their technical analysis knowledge to predict price changes in the stock market. There is no specific time frame in this trading style as it can range from a day to months.
Most of the traders use their technical analysis skills to determine the price movements in the market. The most important technical analysis when determining stock prices is the market outlook.
fundamental business
Fundamental trading refers to stock investing where the trader buys a company’s stock with the expectation of increasing in value over time. The type of trading believes in ‘buy and hold’ strategy.
This type of trading is usually done at company focused events. The quality of financial statements, earnings, growth and management are carefully analyzed.
Trading strategies come in handy and help the investor decide the trading style that they want to pursue. The trader may use a combination of strategies at will but with a thorough understanding of the risks and costs associated with each type of trading strategy.
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