Trade

TYPES OF TRADING

• Day Trading. 

This form of trade involves purchasing and selling stocks in a single day. A single day in stock market terms means 9:15 am to 3:30 pm on a weekday (barring market holidays).

• Scalping. 

It is also known as micro-trading. Scalping and day-trading are both subsets of intraday trading. Scalping involves reaping small profits repeatedly ranging from a dozen to a hundred profits in a single market day. 

• Swing Trading. 

This style of stock market trading is used to capitalize on the short-term stock trends and patterns. Swing trading is used to earn gains from stock within a few days of purchasing it; ideally one to seven days. 

• Momentum Trading.

In case of momentum trading, a trader exploits a stock’s momentum, i.e. a substantial value movement of stock, either upwards or downwards.

• Position Trading. 

Position traders hold securities for months aiming to capitalize on the long-term potential of stocks rather than short-term price movements. 

ADVANTAGES OF TRADING

• Complete control over the investments you pick. 

This lets you follow your own hunches and invest in companies you believe in—and possibly profit if their stocks gain value.

• Learn first-hand about the stock market. 

Because it requires more hands-on involvement than buy-and-hold investing, trading can help you better understand trends in the market.

RISKS OF TRADING

• You may lose some, or all, of the money you use to trade stocks. 

This, of course, is true of investing in general. But it's particularly worth keeping in mind with trading.

• Active trading can be time-consuming. 

As it requires a lot of research and near-constant monitoring to ensure you make informed trades. 

• Trading can be stressful. 

Especially when you're watching your account balance fall.