There are three ways of trading in the stock market. These are Day Trading, Position Trading & Swing Trading. Anyone can trade in any of these ways to earn money but he must keep himself updated about the markets and the company in which he is invested. Now let's quickly understand basics of these three types of trading.
Day Trading or ' Intraday ' - In simple words it means buying and selling shares on the same day. In this type of trading main thing is to use the daily price fluctuations to your advantage. A trader generally buys shares when he anticipates the price to go up. He waits for some hours or even minutes and sells it when price rises. After the introduction of internet it has become more popular with traders. A trader can also sell stocks when prices are up and buy later when the stocks are down - ' Short Selling '. A day trader continously monitors market during trading hours and can trade any number of times in a day. In ' Day Trading ' commission fees is least & a trader can trade upto 4 times the money he has in his account. This kind of trading involves more risk but its more exciting and can turn out to be a fast earning option also. But research shows that day traders lose more money than people who buy stocks and hold for long terms. So for beginners its recommended to trade very few shares ( like 5 share of rs 50 each ) before getting hang of it and then go for large numbers. However, people who get easily exited about things in life must completely avoid it.
Position trading - In this the trader buys stocks and holds it for some months. The trader buys stocks after proper research. He may not monitor the stock market closely during trading hours but keeps himself informed about the economic changes which could affect the market and also about the company in which he has invested. Stocks are bought taking into consideration a longer view of the company and the market. The risk involved is less than Day Trading because the trader does not have to sell stocks in a day.
Swing Trading - In this stocks are monitored for weeks or months before trading. Although a swing trader may not spend hours monitoring the markets closely but he gives more time monitoring fundamental and technical analysis of the company. He carefully studies financial reports and profiles of the company. Most of the Swing traders study only about few certain sectors and as a result they become experts in those sectors. They are able to predict movement of stocks within their chosen sectors more accurately. This way trading becomes less risky and the trader does not have to give his full time to monitor the market. It suits people who are willing to give time to study markets and have patience to wait for good returns.
Day Trading or ' Intraday ' - In simple words it means buying and selling shares on the same day. In this type of trading main thing is to use the daily price fluctuations to your advantage. A trader generally buys shares when he anticipates the price to go up. He waits for some hours or even minutes and sells it when price rises. After the introduction of internet it has become more popular with traders. A trader can also sell stocks when prices are up and buy later when the stocks are down - ' Short Selling '. A day trader continously monitors market during trading hours and can trade any number of times in a day. In ' Day Trading ' commission fees is least & a trader can trade upto 4 times the money he has in his account. This kind of trading involves more risk but its more exciting and can turn out to be a fast earning option also. But research shows that day traders lose more money than people who buy stocks and hold for long terms. So for beginners its recommended to trade very few shares ( like 5 share of rs 50 each ) before getting hang of it and then go for large numbers. However, people who get easily exited about things in life must completely avoid it.
Position trading - In this the trader buys stocks and holds it for some months. The trader buys stocks after proper research. He may not monitor the stock market closely during trading hours but keeps himself informed about the economic changes which could affect the market and also about the company in which he has invested. Stocks are bought taking into consideration a longer view of the company and the market. The risk involved is less than Day Trading because the trader does not have to sell stocks in a day.
Swing Trading - In this stocks are monitored for weeks or months before trading. Although a swing trader may not spend hours monitoring the markets closely but he gives more time monitoring fundamental and technical analysis of the company. He carefully studies financial reports and profiles of the company. Most of the Swing traders study only about few certain sectors and as a result they become experts in those sectors. They are able to predict movement of stocks within their chosen sectors more accurately. This way trading becomes less risky and the trader does not have to give his full time to monitor the market. It suits people who are willing to give time to study markets and have patience to wait for good returns.
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