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Different Styles of Stocks, Options and Futures Trading

by: praveen
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Based on the time interval taken for finishing a trade online trading - including stocks trading, options trading and futures trading - can be classified in to different trading styles. Even though also there is numerous other ways of classifications available, we will concentrate on the above two ways.

According to the normal time wanted for conclude a trade, ie period between buying and selling of a stock/contact/option, online traders can be divided in to two extensive categories as long term investors and short term traders. When the normal phase to finish a trade is an year or less, then the style of trading is known as short term trading. Short term traders are habitually very active traders, trading typically according to market trends and merit of shares. When the normal period to finish a trade goes beyond a year, then the style of trading is known as long term trading. Long term traders are habitually established investors, like mutual funds or share holders/promoters, want to possess shares of special companies or industries for future benefits.

Short term trading style for stocks, options and futures can be divisible in to three chief categories as day trading, swing trading and position trading. Online day trading is so far the most vigorous type of trading, where an online trader finishes his trades in a day so that he will not have any overnight risk of holding stocks/contracts. Online day traders practice this style for very small profit per share. They are of two types as scalpers- trading huge number of stocks/options/contracts with in seconds or minutes for very small earnings per share - and momentum traders - trading with the small price deviations with in a day.

Swing trading style resembles day trading styles, but swing traders are ready to take overnight risks by holding stocks/contracts. The time to finish a trade may be just minutes or even may go up to 4 days. Swing trades usually have improved probability of profit per share. In position trading, the time involved to finish a trade can range between days to months. Online position traders have better chance of profit per share and are, like long term traders, usually company or business specific.

About the Author

Praveen Ortec works for NobleTrading.com, an online discount stock trading broker providing online day trading and online swing trading services on 4 different softwares.

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