Trading is the process through which traders profit from the fluctuations that occur in the stock market. It is an efficient way to capitalize on the price movements in the market. Traders rely on the different types of trading strategies available in the market to earn profits. Here are the different trading strategies used in the market:
- Intraday Trading:
Intraday trading or day trading is how traders buy and sell stocks in the market in a single day. Traders settle their position in a single day, and the trader will not hold their position overnight. Thus, it is an excellent way to profit from the fluctuations that occur in a single day.
- Position trading:
In position trading, a trader will purchase a stock and hold its position for an extended period. The trader holds their position with the hope of profiting from the stock's price movement in the long run. Based on the trader's investment objective, the investment horizon in position trading can last between several weeks to several months. Therefore, it is optimal for a trader who is looking to earn long-term profits from stock.
- Swing trading:
In swing trading, traders monitor the market to find a trend in the market, and once they find the trend, they place a trade to profit from it. Once the trader understands that the trend will die down, they settle their position and exit the trade. It is an effective way to profit from the short-term trends that occur in the stock market. The investment horizon in swing trading lasts around 1 or 2 weeks.
In scalping, traders try to capitalize on the extremely small price movements that occur frequently. As the profit level is a bit small, the traders try to find liquid markets to improve the frequency of the trades. The investment horizon scalping is around a few minutes or hours.
Therefore, trading allows individuals to earn profits on the fluctuations that occur in the market. There are different techniques that traders rely on to profit from the frequent price movements in the market, like intraday, position, swing, and scalping.