Broadly speaking, there are four main types of trading, day trading, swing trading, position trading and investing.
- day trading is when shares are bought and sold within day, this can produce big profits but also tends to be the riskiest.
- swing trading is when shares are kept for 2-14 days and the idea is to follow the current upward or downward trend, like day trading this can be very profitable.
- postition trading is where shares are kept for 1-6 months, this style is used to follow the long term trends of stocks. This style is often used by people in full time jobs who can't devote regular time to managing their stocks.
- investing is where shares are kept for 6 months or more, this style often involves investing in young or highly profitable companies in order to capture their growth with the investment or to recieve their dividends.
It is important to determine what type of trader you are in order to select strategies that suit your style of trading. Stock market courses will help you develop trading strategies.
The amount of time you have to give to trading shares will often determine your style of trading. For example if you want to trade shares and still work full time then you will not be suited to day trading.
