Trading began in prehistoric times. Directly exchanging goods, services, or both was popular as barter. People took advantage of specialisation and division of labour. It was, however, inconvenient as there was no basic measure to calculate the value of products, leading to the invention of money. It then became the standard measuring value for products. However, nowadays, situations have changed.
You rely on the Bombay Stock Exchange and the National Stock Exchange for trade. Understanding what is Demat Account and Trading Account before investing in the Stock Market is essential. Stock Trading occurs in the marketplace, where investors buy or sell shares of publicly traded companies listed on the stock market to raise capital.
Trading types
Stock Market Trading has become popular since Online Trading came into play. All you require for it is a Demat Account, a stable internet connection, a 3-in-1 Account, and sufficient funds in your Bank Account. You can now buy and sell securities and undertake Share Trading from anywhere. Here are the types:
Swing Trading
Swing Trading aims to catch the advances in a stock within one to seven days. You use technical analysis to look for stocks showing short-term price momentum. You are interested in its price patterns and trends. Investors hold their positions from three to seven days, depending on the stock’s movement.
Scalping
It involves making small profits repeatedly. The trade lasts from seconds to minutes. Thus, investors confident about their proficiency in the markets with enough experience can implement this strategy as it requires expert skill. Through scalping, you place 10 to 100 trades in a single day and make a profit through small moves in stock prices.
Day Trading
You hold positions for minutes to hours. However, you require strong discipline, a full-proof strategy, and enough capital to withstand large and sudden losses. You buy and sell stocks on the same day without holding positions overnight. You must learn how to open a Demat Account online with a trusted broker and trading platform for a smooth experience.
Momentum Trading
It involves a ‘breakout’ stock, i.e., a stock price moving outside the stipulated support or resistance level with increased volumes. Once investors identify such a stock, they may ride on its upward or downward momentum. You hold your position for several hours to days depending on the stock movements and directions.
Position Trading
It involves taking a long-term approach to a particular stock. Investors opting for Position Trading anticipate whether the current trend will continue further than momentum or Swing Trading. Due to the long-term position, you make considerable gains without worrying about short-term fluctuations.
Final word
Share Trading does not always guarantee high returns since it involves a bit of risk. But if undertaken systematically after learning the basics and apply the technique suiting your investment goal, it can be an excellent mode of creating wealth.
