Let’s know trading simply means you buy something in the room and sell it on the side when you get more price than it cost price
Basically, there are two types of trading in the stock market.
- Fundamental Trading
- Technical Trading
Fundamental Trading:
These types of trading have sub-types. like The first one: Fundamental Trading is a type “Investing”
- Investing:
This type of trading in stock market is like when we buy a share for a long-term period but remember before buying any company share you will research the company on its income means how much they made a profit in their fiscal year their assets mean how many asset company make by its profit and her labilities and balance sheet of company to earn the profit.
Technical Trading:
The second is technical trading in which traders earn their profit by reading charts and the price of the share to take profit this type is further divided into four types.
- Intraday Trading
- Scalp Trading
- Swing Trading
- Option Trading
- Intraday Trading:
In day trading we are involved in buying and selling stocks within the same trading day. Day traders aim to capitalize on small price movements and typically close all positions before the market closes to avoid overnight risks. This type of trading requires a deep understanding of market patterns, quick decision-making, and real-time analysis. High volatility and liquidity are essential for day trading, as they provide profit opportunities.
- Scalp Trading:
Scalping is an ultra-short-term trading strategy aimed at making numerous small profits throughout the trading day. Scalpers hold stocks for only a few seconds to minutes, seeking to profit from tiny price movements. This high-frequency trading style demands quick execution, constant monitoring, and low transaction costs. Scalping can be highly profitable but also requires significant time and concentration.
- Swing Trading:
Swing trading spans a slightly longer period than day trading, holding stocks for a few days to several weeks. Swing traders seek to capture short- to medium-term gains by taking advantage of market swings or “waves.” They often use technical analysis to identify potential entry and exit points and rely on market trends and patterns to inform their trades. This approach requires patience and the ability to react to market changes.
- Options Trading:
Options trading involves buying and selling options contracts, which give the right (but not the obligation) to buy or sell a stock at a specific price within a certain period. This type of trading can be used for speculation or hedging against other investments. Options traders use various strategies like calls, puts, and spreads to manage risk and enhance returns. This approach requires a good understanding of derivatives and market mechanics.