Trading can be described as the exchange of goods or services, but in the financial markets, it is termed the buying and selling of financial instruments. The trader earns money from the fluctuations in the instruments' prices. Different types of trading involve diverse strategies, time commitment, and risk tolerance.
Types of Trading
There are different types of trading, and each is suited to a different trader. Day Trading is actually a strategy involving the buying of assets and selling them within a single day. The day trader aims to make profits using short-term price movements, and he makes many trades in the same day.
Swing Trading: Swing traders commonly hold a position for many days or weeks to profit off market "swings" or movements of the price. It may be a strategy which many people like to use when coming up with more intermediate term positions.
Scalping: This is a very short-term position strategy because one will garner many small profits made through minute price movements. Generally, scalpers keep up their positions for only seconds or minutes.
Position Trading: Position traders take a long term view of horizon and hold their assets for months or even years. It requires patience and awareness of the trends in the long run market.
Algorithmic Trading: Algorithmic trading involves computer algorithms which execute orders at the best time according to the given market conditions. They are generally used by institutional big investors.
