Different Types Of Trading In Stock Market

In online share trading, traders often choose a trading strategy based on financial objectives, their preference for stock trading, and the desired duration of their investments. In general, there are two primary types of trading in the stock market: short-term and long-term.

On the other hand, if you divide the different types of trading in the Indian stock market based on investment strategies, you will find that there is technical and fundamental trading. Moreover, the types of share trading in the stock market are classified based on the time period as intraday trading, swing trading, and positional trading. 

Due to their common characteristics, these different types of stock market trading tend to overlap. As an example, technical trading has some similarities to intraday trading while fundamental trading has some similarities to positional trading. Here we will discuss how many types of trading in the stock market are there and explore different types of trading in the Indian stock market.

Types Of Trading In Stock Market

If you are wondering how many types of trading in the stock market, well the answer is eight. There are primarily eight different types of trading in stock market. And in this section, we will go over all the types of share trading in the stock market.

Intraday Trading

Also known as day trading, intraday trading is the practice of trading during the day. Intraday trading occurs when an investor buys and sells shares within the same day. This means that if an investor buys a set of shares on a particular day, they must sell them by the end of that day before the market closes.

This type of trading in the share market involves using margins, where investors get credit from brokers. Moreover, you don't have to worry about risk since it's short-term. However, too much margin money can make it risky. It also requires comparatively less capital investment since it allows traders to pay small margins.

Delivery Trading

Among the different types of trading in the stock market in India, delivery trading stands out as a long-term investment approach and is considered safe. In this type of trading, investors purchase stocks with the intention of holding them for a long time.

Unlike intraday trading, delivery trading does not involve margin trading. For their transactions, investors must have the necessary funds and make full payments. Moreover, these types of trading do not allow short selling. Further, dividends are one way investors can benefit from the company's growth over time.

Swing Trading

Swing trading is one of the most popular trading types in the stock market. It involves profiting from price changes or swings in stocks or other financial commodities over a short period of time. To take advantage of price momentum, swing traders aim to hold stocks for more than a single day.

Unlike other types of trading in stock market in India, swing trading is based on a specific time frame. Swing traders typically hold stocks for a short duration, usually less than a few weeks.

A key part of swing trading success is understanding and interpreting market trends. To generate high profits, traders must analyze and make sense of these trends.

Positional Trading

When it comes to different types of trading in the stock market in India, positional trading stands out as a strategy that relies on a "buy and hold" approach. Positional traders hold stocks for an extended period of time, waiting for significant price increases.

Unlike day trading, positional trading seeks to profit from substantial price increases rather than just responding to slight market movements. Traders who employ this trading style can earn high returns, while not needing to constantly monitor their trading portfolios.

Fundamental Trading

Comparing trading types in the stock market, fundamental trading stands out as a strategy where traders rely heavily on fundamental analysis. This analysis involves studying a company's data, growth estimations, and events related to the company.

Moreover, Fundamental trading is often called a borderline investment because it emphasizes long-term investment. The fundamental traders understand the company's growth prospects, management potential, and financial stability. To get high returns on investments, trader wait for favourable market momentum.

Technical Trading

Among the types of share trading in the stock market, technical trading relies on effective technical market analysis. This approach enables traders to interpret price changes in stocks and make trading decisions based on the insights gained.

Additionally, success in technical trading depends on the trader's research skills and knowledge of stocks. It requires the ability to analyse and interpret information presented in charts and graphs. However, it is important to note that technical trading carries a higher level of risk, and tracking patterns is vital for making informed trading choices.

Scalping

Another trading type in the stock market is scalping, which is also known as micro-trading. Scalpers engage in multiple quick trades to capitalize on small profits. The number of scalp trades can range from a few dozen to even hundreds in a single day.

Similar to day trading, successful scalping necessitates a solid grasp of technical analysis, deep market knowledge, and proficiency in recognizing price trends. Scalpers must be aware of market dynamics and swiftly execute trades to take advantage of fleeting opportunities for profit.

Momentum Trading

In momentum trading, traders take advantage of the stock's momentum; pick stocks that are breaking out or will break out. Moreover, trading decisions are based on trend direction.

If there's upward momentum, the trader will sell for more money. Whereas the opposite strategy is to buy low-priced stocks when the market is moving downward.

Know more about Derivative trading

Open Demat Account

Your first step to enter share market

Get Started

* By signing up you agree to our Terms and Conditions

Conclusion

There are many different types of trading in the stock market, including intraday, delivery, swing, positional, fundamental, technical, scalping, and momentum trading. There are several different approaches, each with its own focus and risk profile. 
Online trading platforms like the blinkX app offer a user-friendly experience to traders. Using these apps, investors can participate in various types of trading based on their financial goals.