Types of Short-Term Trading
Short-term trading is defined as the buying and selling of a product, like stocks, options, futures or forex, with in one year. By this definition the almost all online traders comes under the category short-term traders. Short-term trading can classified in to 3 major types as
- Day Trading – The trades buy and sell shares/contracts in same day as he/she will not have any liability after the market closes. This is the most active type of trading and usually the traders completes on trade with in seconds or minutes for very small capital gain per contract/share. Day trading is of two styles:
- Scalpers – Traders who trade large amount of shares with in seconds for very small capital gain.
- Momentum traders – Traders trading according to trends with in a day. Slow process compared to first one.
- Swing Trading – Like day trading, but the process of buying to selling may involve up to 4 days. They are quite willing to take overnight risks by holding the stocks/contracts.
- Position Trading – the time to complete one trade may goes up to days, weeks or months according to the market trends. Position traders have higher gain percentage and higher risks.
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