Tuesday, June 22, 2010

Types of Trading Styles of a Stock Market Trader

Many people who are new to the stock Market might have heard about the words Intraday Trading, Swing Trading, Momentum trading and etc. To understand the concept simply, I have here given some explanations to these terms.
Intraday Trading
If any body buys stocks using margin money and sells the stocks on the same day itself, then it is Intraday Trading. Here buying and selling is done on the same day itself. The quantity may vary according to the trader. The intention of a day trader is to use the movements in the intraday to make money. Personally, it is the toughest trading in the Market.
Positional Trading or Swing Trading
If a trader takes a long (buy) or short (sell) position in the futures market and holding it for more than one day, then it is positional trading. The intention of the positional trader is to make use of the short term price movements of the stock, either in the downside or in the upside. The difference between day trading and positional trading is, in day trading one can use the intraday movement only and the positions are closed on that day itself and also the intraday movement will be less when compared to short term movement but in positional trading the swing in short term would more than the intraday movement.
So automatically, the profit or loss potential is high in positional trading. Those who has high capital can trade the market positionally.

Momentum Trading
Momentum trading is done by traders who interested only in big moves in the downside or upside. They wait till they anticipate a big move. They don’t trade all the time. This trading also has its high risk. If the trader fails to anticipate the correct direction of the market, they he will end up in huge loss unless he cuts his positions immediately.
Select the trading style that suits well your personality. Happy trading



2 comments:

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