Trading

Investing is very much essential these days as saving alone is not adequate to beat inflation and fulfil all our financial goals. People who are conscious about their future, searches and thinks of investment must have listened to word trading but there is a minor difference between them.

Trading is buying and selling of securities, such as stocks, bonds, currencies and commodities to make money on a daily basis. It is done by buying and selling to make profit usually for short term or medium term but they don't get ownership of the underlying asset whereas, in investing investors buy underlying outright at a favourable price. They make profit from owning the asset and selling it at a higher price which is mainly for the long term.

The two main houses where stock markets trading takes place is BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). The platform where traders buy and sell securities is called Exchange.

There are several types of trading available according to the time they want to stay invested, risk tolerance and other factors. According to the time invested trading are of two types i.e., long term and short term, depending on investment strategies there are fundamental and technical trading and based on duration divides trading are Intraday, Swing and Position trading.

As the name suggests day trading is the form of trade which involves buying and selling of stocks in a single day. A trader has to close their positions before the day's market closure otherwise it will be squared-off by the exchange itself.

As the time is less it needs a good understanding of market volatility and that's the reason this is mostly done by experienced traders.

It is also known as micro-trading. Scalping and Day Trading are subsets of Intraday trading. It is a trading style that practices in profiting even with small price changes and can be done several times in a day. They are mainly done to make profits and to cover losses done in them as every transaction doesn't yield profits.

Same as day trading scalping also needs a good understanding of market volatility, market experience and quick decision taking for prompt transactions.

This style is used to earn profits from stock within a few days of purchasing it. In this traders technically analyse the stocks to anticipate the direction of the market.

Momentum is the movement of the stocks either upward or downward. If the stocks move upward it is called upward momentum and if goes downward is called downward momentum.

In momentum trading traders attempt to profit from this price move. In case of upward momentum, trades sell the stocks he/she is holding yielding profits whereas in case of downward movement, traders purchase at a lower rate to sell when the price increases.

Position trading requires traders to maintain their position for an extended period and ignore the slightest market movements. It yields profit when trade waits for a significant period before selling off.