Do you know what is Trading and its types ? If no then let’s begin.
What is Trading?
Trading means buying and selling of goods and services. It mainly involves buying and selling of stocks, bonds, shares etc…
In trading, any share or goods is held for a short duration of time and sold when it gives benefits or profits. Trading is the base for all economic activities and covers a wide range of areas.
The goal of trading is to make profits for traders. Traders usually buy the shares at a lower price and sell when it gives some profits or when the price is maximum. This whole process of buying and selling shares in the market is known as Trading. And the place where these all the processes take place is known as Market.
It works on buying and holding strategy that is buying goods or shares when the price is lower. And hold it for some time(until its prices rise), and selling it.
One of the main differences between Investor and Trader is that Investor makes long term investment whereas trader makes a short-term investment.
Types of Trading
Trading is basically of 4 types.
Trading in which stocks or goods is hold for a short duration like 2 to 5 minutes (max.) then such trading is known as scalping. Sometimes time duration may be in seconds.
Scalping is the fastest trading in all other tradings. Due to the short duration of time losses and benefits in scalping is quite low than other tradings. In scalping, traders have to monitor the market continuously and especially the shares they hold.
2- Day Trading
Trading in which stocks or goods are held for a day then such trading is known as day trading. Day trading is considered the riskier approach in trading stocks as the stocks are held for a day. And in this interval the value of the share may be higher or lower.
One of the benefit in day trading is that anyone can do it from anywhere in the worlds with no overnight risks.
3- Swing Trading
Trading in which stocks are held for several days even a week or more then such trading is known as swing trading. In swing trading, profit and loss are very slow that is if you are slow then you will slowly lose your money. And if you are in profit then you will slowly gain money.
As for scalping, you don’t have to stick with the market in the swing trading. Swing trading requires research and analysis of stocks before investment.
4- Position Trading
When a stock is held for a long duration of time like for a month or a year then such trading is known as position trading. Position trading requires fewer efforts with a low risk of losing money.
Position trading requires research and analysis of stocks before investing money in it.
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