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Trading Types –
Day Trading, Swing Trading & Position Trading
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Market Trading can be classified into either of these categories - Day
Trading, Swing Trading and Position Trading. However, the common
factor among all types of traders is that
Stock market traders keep up with the news. The businesses and
industries react to government actions, changes in oil prices, economic
forecasts and world events. The
successful stock market trader stays
informed about the circumstances outside a company that could cause price
fluctuations for the stock.
Day trading conditions
the most intense approach to stock market trading. To be on top of the
fluctuations in stock prices, day traders spend hours together in monitoring the
market. Day traders could make dozens of trades any day, sometimes in a matter
of minutes hoping to grab the wave of price change. They avoid the risks of long
term buy and hold. Day trading could be exciting, the fast pace attracting risk
takers. Yet this strategy for stock market trading is only effective for day
traders, who apply analysis rather then emotion to trading decision. Savvy day
traders could turn profits quick. Emotional traders usually lose fast and leave
disenchanted.
Swing trading uses
a slightly longer time horizon than day trading, watching a stock for weeks or
months before trading. This type of stock market trading relies on careful
monitoring of fundamental and technical analysis. Swing traders often specialize
in a certain business or industry so that they become experts in the movement
within those stocks. They also have more time to study the company financial
reports and industry forecasts. Since swing trading does not require hours of
daily monitoring, it is a good strategy for the trader who wants to make money
from stock market trading without turning it into a full time job. Even the
study of reports could be done during the daily commute or lunch hour so that
the swing trader stays well informed.
Position trading works
well for investors who want to be involved in the stock market trading, but run
short of time. Stocks are being held for months awaiting any changes in the
trend. Position traders keep up with the fundamental and technical analysis as
well as news events but apply a long term strategy to their stock market
trading.
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