Types of Day Trading May Be Distinguished By the Length of Time the Trader Holds Stocks

Kinds of Day Trading

There are various types of trading in which day traders engage. These different styles vary most prominently in the amount of time in which stocks are actually in the day trader’s possession. Other styles fall into different categories because of the medium used to trade.

Basic Day Trading

The most basic style of day trading involves buying stock on a daily basis and holding that stock for as little as a few seconds to just a few hours. The basic day trader tries to get quick, short term profits from stocks rather than investing for the long term. Day traders begin the day with no stocks in their possession and end the day with no stocks in their possession. They spend the entire day buying and selling stocks at a rapid rate in the hope they will earn a small profit from each transaction. They eliminate the risk associated with holding stocks overnight. There is risk in holding stocks overnight because of the chance that breaking news or developments that occur after the closing bell could cause a stock to plummet.

Swing Trading

This style of trading is very similar to the basic day trading style with the difference being the length of time that a swing trader holds their stock. The swing trader will hold a particular stock anywhere from a few hours to a few days. This style of trading can produce higher returns in the long term but the trader assumes a higher risk by holding stocks overnight.

Position Trading

Again, there is an increase in the amount of time that a particular stock is held. Position traders look to market trends and other markers to determine which stock will increase their value over a given period. Generally, this period of development takes longer to run its full course which translates into position traders owning a particular stock for as long as a few weeks or months.

Online Trading

The amount of time that a stock is held does not distinguish online trading from any of the previous three types. Rather, it is the fact that the trading is done over the internet or a direct access trading platform that makes this type of trading unique.

feedback@improvedaytrading.com