What is Stock Trading? Definition, Types, and Examples

Friends, often we get to hear the word 'Trading' in the Stock Market, today we will discuss "What is Stock Trading", and how many Types it has?

Stock Market Trading has become a market where anyone can become a millionaire in a day.
Yes, Friends, Stock Market Trading is a very good platform to Earn Money Online.

You do not need any money to start freelance work, but you will need some money to start your career as a Stock Trader. You can make money online by doing Stock Trading, if you know how to raise the right stock.

But you also have to take the risk in this. You can lose money in stock trading, so start with less money and invest more time in learning the basics of stock trading.

By investing in stock market trading, you can earn very good money and can fulfill all your dreams.

So let's know What Stock Trading is, and how many Types it has?

What is Stock Trading? Definition, Types, and Examples:

Definition :

Stock Market Trading :

Trading means buying and selling an item or service to make a profit.

Trading means business, when we buy an item or service for the purpose that we will make a profit from it by selling that item and service after some time, then it is called "TRADING".

We see all the business around us - whether it is a ration or vegetable shop, another shop, all shopkeepers buy goods or services for this purpose so that they can make a profit by selling it.

Trading in the Stock Market :

We saw that Trading means buying and selling to make a profit or service, just like when we buy any Stock or Share in the Stock Market, our main objective is that Share or Stock. When the price increases, it can be made a profit by selling it, and thus more than 99% of the people participating in Stock Market buy and sell any shares or Stock, their action is called "Stock Market Trading".

Types Of Stock Trading In Share Market :

Once it has been decided that trading is to be done in the stock market, after which the biggest decision is what type of share trading to do.

There are many styles of trading in the stock market. No trading style is very good or bad, but according to the expectations and risk-taking ability of your market, a Share Trading Type can be right or wrong for you.

To choose a good trading style, you have to analyze your Emotion, Psychology to know which trading style is good for you.

 Whenever you enter the stock market, try and see all the types of trading and then analyze which trading type has a good success rate.

Choose the same trading type that you are confident that you can do it correctly.

1. Scalping Trading :

Within Scalping Trading, the stock is sold from a few seconds to a few minutes. In this, the small movements that come in the market are taken advantage of, And till the market is closed a lot of trades are done.

Example: Suppose there is a share whose current price is 100 rupees and you have bought 10000 shares of it. Now as soon as that share increases from 100 rupees to 100.50 paise, then you sell that 10000 shares. So this will give you a profit of 5000 rupees. This is called Scalping Trading.

2. Spread Trading :

Many times, there is a huge difference in the Best Buy Price and Best Sell Price of 2 contracts of the same stock, and taking advantage of this difference, trading is called Spread Trading. Spread trading is mainly done in Future Contract.

Example: Suppose there is a share whose future contract's current month price is 100 rupees and next month's price is Rs 102, then in the current month, 10000 shares should be bought and 10000 shares sold in the next month. So the end of the month when the spread will be reduced in both contracts, it can be reduced up to Rs 2 per share on 10000 shares, which means that up to Rs 20000 can be reduced.

3. Intraday Trading :

Within Intraday Trading, the stock is sold for a few hours or before the market closes. In this, the movements that come within a trading day are taken advantage of.

Example: Suppose there is a share that is worth 100 rupees and you bought that share for intraday. Now before the closing of the market, whatever the price of that share is you are going to profit or have to book the loss, it is called intraday trading.

4. Arbitrage Trading :

Many stocks are listed on more than one stock exchange and sometimes there is a difference in their price and trading by taking advantage of it is called arbitrage trading.

Example: Suppose there is a stock which is listed on both NSE and BSE, if there is a difference in the price of both, then buy one side and sell it on the other side and when the difference is reduced then square off both positions. This is called arbitrage trading.

5. BTST (Buy Today Sell Tomorrow) Trading :

BTST (Buy Today Sell Tomorrow) trading is called today to sell shares bought today. Many times a stock is opened today at a price that is close to more or less the next day. To take advantage of this is called BTST Trading.

Example: Suppose there is a stock that has fallen 10% today. Now if you think that this stock will fall further or this stock has fallen a lot tomorrow, it will go up slightly on the basis that if you buy the stock today, sell tomorrow. To do this is called BTST Trading.

6. Momentum Trading :

Trading on a breakout on a certain day, when the stock has a breakout, Momentum Trading says breakout can be of many types like Price Breakout, Volume Breakout, Chart Pattern Breakout, etc.

Example: Suppose there is a stock that has been trading between 100 rupees to 102 rupees for the last 1 month and after 1 month that stock goes to 102.5, then it is assumed that the stock has given its breakout, normally the stock Gives a breakout in the direction a little further in the same direction.

7. Swing Trading :

When shares are kept for a few days to a few weeks and sold, it is called swing trading.

Example: Suppose there is a stock that is currently running at 100 rupees and the stock has given a breakout today, then earning money by taking advantage of the stock movement that will happen in the next 1 to 2 weeks is called swing trading.

8. Positional Trading :

Within Positional Trading, if a stock is sold within a few weeks to a few months or a year, it is called Positive Trading. Profit is earned by taking advantage of the long movement that comes within the stock price.

Example: Suppose there is a stock whose current price is 100 rupees. You did a fundamental and technical analysis of the company and you thought that these shares could go to 120 rupees in the coming 8 to 10 months and bought the stock and sold it after 10 months. This is called Positional Trading.

9. Algo Trading :

Algo Trading is a special type of trading in which the computer program trades on your order, which level to buy and which level to sell, Algo Trading Software automatically takes all the decisions, just once in the beginning it has to give Instruction.

10. News or Event Trading :

Trading by taking advantage of the movement that comes at the share price due to news or events in the share market is called News or Event Trading.

Example: Suppose there is a stock whose quarterly result is going to be declared, if the results are good then the stock will go up and if the results are bad then the stock is going to go down, based on this, it is called News and Event Trading.

If a trader is very active in the stock market, he can trade using more than one trading style by creating his different trading strategy, but usually, the trader would prefer to trade by mastering one of the stock trading types. And this is also considered right in the market.

Changing your Share Trading Style, again and again, is just a waste of time. If you are a Stock Market Beginner then learn and try all Trading Types but use only one type of trading in a long time. Keep learning and keep your Trading Skills Keep improving.

Conclusion :

We hope that you will get answers to many of your questions here today.

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