Different Trading Styles

 

There are now different markets available in which people can trade. Gone are the days when trading was restricted only to few people who have the privilege of knowing many factors and trading was restricted to only publically listed companies. Now there are many other trading that are done like forex, commodities etc. Depending on a person’s risk appetite, the amount of money they can invest and the duration they can hold and the amount of money they can rotate there are different styles of trading.


Intraday trading:


In this type of trading, the person buys shares or commodities at the start or mid of a day and then sells them off before the end of the day. In this way of trading, there is a risk in the sense that if the price goes down there is a certain loss that cannot be recovered. The percentage increase is also limited. However, based on some market news and news about the particular stock or commodity one can make a good profit by choosing the right days to trade on that particular item.

Positional trading:


In this type of trading, the person depends mainly on a combination of technical and fundamental information of the item. Here the term for which the item is held is for a short duration. The trader does not try to time the market but once he has made enough profit he quits. However, the trader does not hold for too long either, thus having a bigger risk but not as big as an intraday trader.

 

Technical trading:


Here the trader believes on technical analysis of stock or commodity. There are many statistical data available on the items and here targets are set for a certain duration in mind. For example, an item is selling at 50$ today and there will be a technical target of it reaching 60$ in one month. The trader then waits and within a month whenever the 60$ is reached he sells. This is less risky as it is more an educated guess but past performance and trends are not a guarantee for future trends. In this type of trading one has to keep track of the markets regularly and may not be so easy to do it in leisure time.

 

Money flow based trading:


This type of trading is more like flowing with the wind. Invest when there are more big investors investing and quit when big investors quit or just before them. This is very risky as one does not know when the big investor would take off all his money. This is a very risk but rewards could be high if the timing is right.

 

Event based trading:


Here the trader is more glued to information on the news across the world. For example, if there is a good harvest that is predicted then there are some stocks that react to it. An election result would trigger the markets up or down. Quarterly results would spice up or beat down a stock. Natural calamities would bring the stock market down but at the same time, there may be a bigger demand for commodities due to the shortage. Thus one can use this information to trade.

 

Long term trading:


A safe trader or rather in this case a long term investor puts his money based only on fundamentals of the stock. Here the investor may be invested for years together before he or she sells off the stock. This is more prominent in stocks rather than in commodity trading. Even here there is no guarantee of a profit but the risk is significantly lower when a good stock is chosen.

There are some more types of trading which are a combination of the different ways. .

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