Trading is a part of our economy that involves the buying and selling of goods and services. International trade between nations allows consumers and countries to have exposure to the products (goods and services) that are not available in their own countries. To understand different types of trading, Guy Gentile talks about five different types of trading for today’s traders. He is a successful multi-millionaire day-trader who has made his fortune through the stock market. Also, he is the founder of DayTraderPro Academy and offers a fundamentals course for trading that helps people learn the fundamentals of trading.
Five types of trading for beginner traders:
There are five main types of trading available to technical traders: day trading or intraday trading, scalping, swing trading, position trading, and momentum trading. It is crucial to master one style of trading, but the trader must be proficient in others as well. If in doubt, stand away from the market. Staying ideal is considered a defensive position, and there’s nothing wrong with waiting for an opportunity.
Day trading:
Day trading is all about buying and selling on the same day without holding a position overnight. A day trader closes all trades before the market closes. Most day traders use leverage to increase the returns generated by small price movements. Day trading is one of the riskiest and most exciting investment ventures. Intraday trading requires excellent timing and precision.
Scalping:
Scalping (micro-trading) is about taking very small profits multiple times. Typically, trades last from seconds to minutes. Scalping is a trading strategy that attempts to make multiple profits on small price changes. Guy Gentile would not recommend it for beginners. Both scalping and day trading requires constant discipline, time, and the ability to learn the trading.
Swing Trading:
Swing trading is a trading style that tries to make gains in a stock within 1 to 7 days. Swing traders are focused on price trends and patterns. A typical holding period for a swing trade is 3-7 days.
Position trading:
Position trading caters to traders who cannot trade frequently; position traders stay in trades for a week to months. Position trading is the polar opposite of day trading as the goal is to profit from a move in the primary trend, rather than the short-term volatility that occurs today.
Momentum Trading:
In momentum trading, traders focus on stocks that are moving significantly in one direction with high volumes. Typical time frames for momentum trading range from several hours to several days, depending on how fast the stock moves and when it changes direction.
Guy Gentile mentions that no trading is limited to buying. keep in mind the possibilities of online trading, and be mindful of your trading decisions and thoughts on trading. He added with a few tools or steps, the trader can sell the stock short. This means that profits can be made with both rising or falling in markets.
