Trading is the process of buying and selling of securities. There are various trading strategies associated with different markets environments and risk inherited.
Let us discuss some of the trading strategies which are most popular among the rest and can help the investors to make a rational investment decision.
Intraday Trading
Intraday trading also known as day trading refers to trading strategy where the investors buy and sell the securities on the same trading day. They close their trade before the closing hours of the stock market and book profits and losses.
The investors can wish to hold these securities for a couple of seconds, hours or multiple times in one day, therefore intraday refers to a highly volatile trading strategy and requires fast decision-making.
Positional Trading
Positional trading is a strategy where securities are held for a longer time like for months or years. They hope to make profits by expecting big price movements over time. The investors usually adopt this style of trading by keeping their base on technical grounds along with fundamental analysis.
Therefore, short-term complications like market trends and fluctuations are usually ignored in such a type of trading strategy.
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Swing Trading
Swing trading usually refers to a strategy where investors hold the securities for more than a day in order to gain further price momentum of stocks. Swing traders are known for predicting market activities and trends overnight.
The time frame of holding the stocks is an important difference between intraday traders and swing traders. It is therefore said that mostly technical traders fall under this category of trading.
Technical Trading
As the name suggests technical trading includes investors who use their technical analysis knowledge to predict price changes in the stock market. There is no particular time-frame in this trading style as it can range from a day to months as well.
Most traders use their technical analysis skills to determine price fluctuations in the market. The most important technical analysis is the view of the market while determining the stock prices.
Fundamental Trading
Fundamental trading refers to the stock investment where the trader buys a company’s stock with an expectation of it growing in value over time. The type of trading believes in ‘buy and hold’ strategy.
This type of trading is usually done in company focused events. There is a careful analysis of financial statements, earnings, growth and management quality done.
The trading strategies come very handy and help the investor in deciding the trading style they want to pursue. The trader wishes can use a combination of strategies but with a thorough understanding of risk and cost associated with each type of trading strategy.
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