Stock trading- the various types

When you think of stock trading you might perhaps think that it is nothing but buying some stocks, observing price changes and selling them. Though the gist remains the same the way you do it might be different. Trading, in general, can be done in several ways. You could trade currency pairs as a forex trader or you could also trade in cryptocurrencies which are now popular across the world. If you do not have the time to manage your funds then there are the managed funds like mutual funds, managed forex accounts as well as exchange-traded funds.

For beginners looking for an automated trading system that is simple and straightforward, this source would give you information about one such system. All you have to do is to create an account and then make a deposit.

If you are trading in stocks the broadest classification of trading types includes day trading, short term, long term and medium term trading.

And then based on the technique followed in order to make trading decisions there are several types:

  • Scalping
  • Arbitrage
  • Momentum day trading
  • Market making
  • Price action trading
  • Swing trading
  • Rebate trading
  • Trend following
  • Range trading

Day traders are those that execute short day long trades. These are trades that are completed, the buy and sell calls are both done within the same day before the trading session closes. This is a short-term trade and so the price difference that occurs within the same trading session would determine the actual profits made. The overnight changes that occur in the market do not really have an impact on the day traders.

Short and medium trading involves buying stocks based on the current direction. Within days or weeks when the price is likely to hit the resistance level and reverse direction the stocks are sold. These are great for those who are investing in the stocks based on news and sudden business decisions that are likely to lead to an increase in the price change.

Long-term trading is ideal for those who do not mind compromising on the liquidity. Multi-bagger stocks that are priced very low in the current market but have the chances of having their price multiplied in few years are great for long-term investments. The price change might be slow but the profits reaped after few years would be pretty high in comparison with the short and medium term trading options.