Stock Market is a subject that is not known well by a many people but it is sure interesting. You must have been fascinated to get into stock market trading at least once in your life. Let me tell you that you are not alone!
There are different types of stock market trading. However, your goals and risk taking capabilities determine which one you should pick for making good money. If you are creating wealth for future then you should go for positional trading. If you wish to make money in short span of time then go for short term trading.
The golden rule of trading in stock market is ‘educate yourself’. It’s easy to start trading but it is difficult to do it rightly. It takes years of learning and expertise to start making money in stock market.
Let’s not make this too long and quickly discuss types of trading that take place in India.
Intraday Trading
In this type of trading you buy and sell a stock on same day. You can buy a stock any number of times after the market opens. But you have to close your trade before the market gets closed. You can hold a stock for few seconds and even for whole day. It is recommended for traders who are active in the market because it is risky. You have to make quick decisions. All the beginners should stay away from this.
Delivery Trading
This is commonly known as positional trading. It is the best kind of trading for beginners because you can hold the stock for long term. You can hold a stock for years, unless the company gets delisted from stock exchange. The trick in this is to identify stocks with large price movements. In that way you can make money. You buy a stock when the trend is emerging and you sell it when the trend is at peak.
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Investing In Mutual Funds? Know This First
Short Sell Trading
This is a type of trading that is recommended for experienced players in the market. Trader sells the share without holding them. You will first sell the shares and then buy it back before the market closes. The logic behind this trading is that you think prices of the shares will fall before the market closes. Your position has to be squared off before market closes. In simple words you sell shares at a higher price and later buy it at a much lower price.
Buy Today Sell Tomorrow
In this type of trading you buy a share after anticipating that its prices will go up the next day. Next day when the market opens you sell your shares and make profit. You do not get delivery of shares in this because in India the settlement cycle is T+2. The best thing about this trading is that you do not have to pay Depository Participant charges because you did not get any delivery.
Margin Trading
This involves buying and selling of securities in a single session. It is for experts who are good at making quick money. It is useful for traders that do Future and Options trading. In this you have to buy a minimum lot in one go and you also have to pay initial margin to trade. Initial margin is a certain percentage of total traded value and SEBI determines it.
