What Are the Different Types of Stock Trading Strategies?

By Rashidul Amin

Stock trading involves the procedure of buying and selling stocks from the stock market and the goal here is to attain the maximum level of profit by implementing perfect strategies. A stock trader can go long or short to exploit the market and it can be done by entering or exiting the market. There are predetermined set of rules and regulations that you must follow as well.

With that in mind, there are hundreds of trading strategies with which the trader can trade as well as to shield their valuable investment. However, there are two broad types of trading strategies. One is short-term and other is long-term. The short-term strategy includes the following.

-Position Trading
-Day Trading
-Swing Trading

I have explained both the short-term and long-term stock trading strategies and they are as follows.

1. Day Trading: Day trading is the riskiest strategy among many other trading strategies. This strategy involves trading on a short-term basis and the least time for trading can be a few minutes. Moreover, to survive in day trading, you must be analytical as well as rational while trading. In addition, day traders are mostly reliant on the movements of the stock prices to get in and out of a position. In short, this trading strategy requires careful attention to different market conditions. So, only the professionals can undertake the day trading strategy.

2. Swing Trading: In Swing trading strategy, the trading duration spans for one to five days and the trend analysis is the basis of this strategy. In addition, swing trading strategy always looks for the best possible movement of share prices trend and the traders are required to spend more time for identifying opportunities. Generally, the traders need to be conceptually sound. And they have to put a lot of effort on research work. This type of trading is driven by emotion rather than fundamental trading values. Lastly, if a trader doesn’t find the appropriate stock market changes, then trading would be quite difficult to conduct.

3. Buy and Hold Trading: This strategy is a long-term strategy, which is opposite to day-trading. In this trading strategy, you will be required to buy and hold the stocks for a long period of time to grow. There is a theory that is called efficient-market hypothesis, which describes that all the shares are reasonably valued and it is futile to trade the shares repetitively. One important fact that must be noticed is that this theory is applicable for only the efficient market. Additionally, the volatile and fluctuating markets won’t even consider it, which ultimately invalidating the strategy in these markets. So, if you research and pick out the best stocks with potential value and return, then buy and hold strategy will earn you lots of fortunes.

Bottom Line

Finally, it can be said that there are different trading theories and strategies that vary from market to market. This is why you have to learn the strategies and educate yourself. You should also take time researching the right strategies. The reason is developing a key strategy is the secret of sauce of success in stock trading! So, don’t waste time and start learning!

Stock Trading involves implementing the right strategies. This article will help the readers to learn the right strategies for stock trading!

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