Trading enthusiasts can find a plethora of opportunities in the stock market. Since every individual has a unique personality, you need to choose your trading style first to find the best opportunities and follow a strategy. Here are the ten trading styles. You can choose one of the following types of trading in share market that matches your financial objectives, psychology, and personality.
1. Intraday Trading
Intraday trading refers to the trading practice where you need to buy and sell securities within the same trading session before the market closes. The time between entry and exit varies from a few minutes to hours. It is one of the most aggressive trading styles that traders adopt with a high-risk appetite and look for higher returns. Intraday trading essentially requires stocks with high liquidity. Intraday trading charges are different from other trading.
2. Swing Trading
It is a short-term trading style where traders take positions for two days to two weeks. Swing traders prefer stock or options trading based on technical analysis.
3. Arbitrage Trading
Arbitrage trading means taking advantage of stock price differences on two or more exchanges. Finding these opportunities in the stock market requires skills and speed as these are generally short term opportunities.
4. Positional Trading
It includes short term and long term trades. Traders can take positions with a short term as well as long term vision. Here the holding period is not a concern. They can find opportunities in any time frame.
5. Options Trading
As the name suggests, here, traders trade in the options market. It requires sufficient knowledge of the market and trading skills with objective thinking with a bit of practice based on strategies.
Scalping is an extremely short term trading style. Here traders make speedy trades with a laser focus on chart analysing. Traders focus on price action and technical analysis rather than fundamental analysis.
7. Part-time trading
You can get a few hours from your day job and trade as a part-time trader. You can find opportunities around the opening and closing hours of the stock market.
These are the trading styles based on the time frames. Trading styles can be categorised based on quality, strategies, and specialty, as mentioned below.
8. High-Frequency Trading
High-frequency trading includes huge trade orders at high speeds. Generally, it is used by investment banks, institutional traders, and hedge funds as there is no time for analysis before execution. Here trading frequency is much higher based on tried and tested algorithmic trading strategies. The mechanisms of HFT are advanced enough that a retail investor may not grab. It eliminates manual intervention in the trading process.
9. Money Flow Strategy-Based Trading
It involves promoter deals, stake sales, FII inflows, DII flows, and open interest analysis to trade in the stock market. Such data is used to identify the upcoming trends. One who can analyse money flows can follow this trading strategy.
10. Quantitative Trading
This trading style is sophisticated based on quantitative analysis. Traders from a statistical or mathematical background can trade based on number crunching. Such traders have sound programming and mathematical skills.
How to open trading account online
You need an online trading account to trade in the stock market based on stock exchanges operating only.
Approach a stockbroker and inform them about your preferred trading style. They will suggest you the right trading account.
Access their online trading account application form. Fill in with required personal details and upload KYC documents along with income proof. Submit the application for verification. The broker will activate your trading account after successful verification and provide you with the login credential.
Novice traders may have trouble choosing the trading style. What they need to consider is the risk profile, skills, and knowledge to achieve long-term success in the market. As every trader has different needs, there is no conclusive best trading style or strategy. You need to ace your own style. These different trading styles need different strategies. Keep learning and exploring the market to add to your knowledge base.