The stock market is an ocean of opportunities for tradingenthusiasts. It is very lucrative if strategized and followed through well.Since every trader has a unique personality, trading styles may differ fromperson to person.
Following are the 10 trading styles. Choose the one which matchesyour psychology.
1.Intraday Trading:
This is the mostcommon type of trading practiced in the stock market by traders. Intradaytrading refers to same–day trading. The traders have to sell and buy or buy andsell their stocks in the same day before the market closes. This style can alsobe referred to as “squaring off the trade”. It is one of the most aggressivetypes of trading for ones seeking higher ROIs than any other formats.
2.Swing Trading:
This is a type of short-term tradingthat typically lasts between 2 days to 2 weeks.Swing trading is a good option when one wants to invest in stock or options.Technical traders and chartists who like to observe short-term price momentumusing technical tools fall into this category. The capital required here islarger than in day trading due to more margins in overnight trades.
3.Arbitrage Trading:
Arbitrage trading is astyle which takes advantage of price differences in two or more markets orexchanges. This is reserved only for prime trading firms with a huge network asthis doesn’t need many analytical skills but needs more network speed.
4.Positional Trading:
This is a long termtrading strategy. Positional traders ignore short term fluctuations in themarket as they believe their long term vision settles things out. Traders arealways on the lookout for big game changers within the company to get themtheir desired returns, hence holding period isn’t the most important concern.
5.Options Strategies:
Options trading require an objective and mathematical type ofthinking. Since strategizing is a difficult ball game, one might require a bitof practice and time to become good at making their own strategies andimplementing them. In India, there are very few options traders, mostly due tolack of awareness and sufficient knowledge.
6.Trade using TechnicalAnalysis:
Stock market technicalanalysis is important to any strategy of trading. Use of stock technicalanalysis tools may give you a better insight in the near changes in demand andsupply of the stock market. Having technical analysis as a skill helps tradersbecome successful day traders, positional or even swing traders.
7.Money Flow BasedTrading:
Moneyflow based trading depends on open interestanalysis, promoter deals, stake sales, gross delivery data, FII inflows and DIIflows in and out of stocks. Such data is essential to identify upcoming trendsin the market. If you have a penchant for analysing money flows, this is theright type of trading strategy for you.
8.Trade Driven by Events:
Event-based tradingtakes advantage of a corporate event that has occurred or is about to occur. Itseeks to exploit the changes in the market prices at times of mergers andacquisition, bankruptcy, earnings call and so on. This trading style requirestechnical analysis skills to understand how such changes affect the marketbefore an event takes place.
9.High Frequency Trading:
High frequency tradingis all about speed. Investment banks, institutional traders, hedge funds etc.make use of high speed computers to transact huge orders at high speeds. Sinceeverything is computer based, there is no room for analysis and only quick calls for execution. This type of trading is not advised to individuals, butif you are interested, you may start your own fund or join a fund as itsprogrammer.
10.Quantitative Trading:
Quantitative tradingis based on quantitative analysis. It is a very sophisticated area of QuantFinance. Many people from a statistical or mathematical background find their niche usingcomputer analysis and number crunching. Aninterested person needs to have good programming and mathematical skills. It isadvised that you research this style extensively before adopting it.
Bottom-line
Every investor has different needs and demands from the money heputs into the stock market. There is no conclusive “best trading strategy in thestock market” because success comes to those who ace their own style.
If you are a beginner in stock markettrading and want to learn the proven and profitable strategies of stock market,you can opt for our trading courseswhich will make things easier for you. Forhassle free trading, open your Demat account with Indira Trade.
