Top 5 Stock Trading Strategies Every Trader Should Know

Trading is the process of buying and selling securities. There are various trading strategies associated with different market environments and inherited risks.

Let’s discuss some of the most popular trading strategies among others that can help investors make a rational investment decision.

Intraday trading

Intraday trading, also known as day trading, refers to a trading strategy in which investors buy and sell securities on the same trading day. They close their trade before stock market closing hours and post the profit and loss.

Investors may wish to hold these securities for a few seconds, hours or several times in a day. Therefore, intraday refers to a highly volatile trading strategy and requires quick decision making.

Positional trade

Positional trading is a strategy in which securities are held longer, such as months or years. They hope to make profits by expecting big price moves over time. Investors generally adopt this style of trading by keeping their base on technical basics as well as fundamental analysis.

Therefore, short-term complications such as market trends and fluctuations are usually ignored in this type of trading strategy.

READ MORE: What are the different types of trading accounts? MintGenie explains

Swing Trading

Swing trading generally refers to a strategy in which investors hold the securities for more than one day in order to build momentum in stock prices. Swing traders are known to predict market activity and trends overnight.

Stock holding time is an important difference between intraday traders and swing traders. It is therefore said that most technical traders fall under this category of trading.

Technical trade

As the name suggests, technical trading involves investors who use their knowledge of technical analysis to predict price movements in the stock market. There is no particular timeframe in this style of trading as it can also range from one day to several months.

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 when determining stock prices.

Fundamental trade

Fundamental trading refers to stock investing in which the trader buys a company’s stock with the expectation that it will increase in value over time. The trading type believes in the “buy and hold” strategy.

This type of trading is usually done at business-oriented events. Careful analysis of financials, earnings, growth and quality of management is performed.

The trading strategies are very practical and help the investor to decide which style of trading he wants to pursue. The trader wants to be able to use a combination of strategies but with a thorough understanding of the risks and costs associated with each type of trading strategy.

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