Swing Trading

Swing trading attempts to capture gains in a stock (or any financial instrument) within an overnight hold to several weeks. Swing traders use technical analysis to look for stocks with short-term price momentum. These traders may utilize fundamental or intrinsic value of stocks in addition to analyzing the price trends and patterns.

Swing trading involves holding a position either long or short at least overnight and or up to several weeks. The goal is to capture a larger price move than is possible on an intra-day basis. Swing trading assumes a larger price range and price move and therefore requires careful position sizing to minimize downside risk. Swing trading can involve a mix of fundamental and technical analysis. Swing trades usually rely on larger time frame charts including the 15-minute, 60-minute, daily and weekly charts. Swing trades tend to require more holding time to generate the anticipated price move.

Intraday Trading

Swing trading attempts to capture gains in a stock (or any financial instrument) within an overnight hold to several weeks. Swing traders use technical analysis to look for stocks with short-term price momentum. These traders may utilize fundamental or intrinsic value of stocks in addition to analyzing the price trends and patterns.

Swing trading involves holding a position either long or short at least overnight and or up to several weeks. The goal is to capture a larger price move than is possible on an intra-day basis. Swing trading assumes a larger price range and price move and therefore requires careful position sizing to minimize downside risk. Swing trading can involve a mix of fundamental and technical analysis. Swing trades usually rely on larger time frame charts including the 15-minute, 60-minute, daily and weekly charts. Swing trades tend to require more holding time to generate the anticipated price move.

Positional Trading

A position trader is a type of stock trader who holds a position for the long term (from months to years). Long-term traders are not concerned with short-term fluctuations because they believe that their long-term investment horizons will smooth these out.

This is a type of trading style which ignores the minor short-term fluctuations that swing traders are fully focused on. Positional trading involves lesser leverage than swing trading. The holding timeframe of each trade is higher as these traders anticipate a big pice movement in the coming future. Timing the market is not the top priority for this category of traders as they are willing to weather the storm and wait out a few months to see a large gain. Their focus is usually a hybrid of technical and fundamentals. To be able to hold positions for a longer time period, they feel like they have to be sure of what's happening within the company. They're usually looking for the underlying stock to gain more than 20% in the near future.

Options Strategies

Is your thought process very objective and mathematical? If you like outcomes to be more defined and measured, then trading options strategies may be your thing. The most difficult part about this is to formulate the strategies. It takes quite some time to become proficient and start making your own strategies and implement them seamlessly which is why there are very few options trading specialists in India.

Options strategies allow traders to profit from movements in the underlying assets that are bullish, bearish or neutral. In the case of neutral strategies, they can be further classified into those that are bullish on volatility and those that are bearish on volatility. Traders can also profit off time decay when the stock market has low volatility as well, usually measured by the Greek letter Theta. The option positions used can be long and/or short positions in calls and puts.

Trading Based on Technical Analysis

The technical analyst should distinguish trends, watch technical slips and indicators, and follow other trading rules based on technical analysis.

Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation.

Trading based on money flows

Money flow is calculated by averaging the high, low, and closing prices, and multiplying by the daily volume. Comparing that result with the number for the previous day tells you whether money flow was positive or negative for the current day.

It is based on FII Inflows, DII flows in and out of stocks, Open Interest analysis, promoter deals, stake sales, gross delivery data, Index rebalancing etc. More often, than not, this data is vital to identify the near term trends in the stock market. Many professional traders give such information first priority and then back it up by technical analysis of stocks and indices.

Event Based Trading

Trading based on some events that have occurred or ones that are about to occur is a type of trading style in itself. Events can range from good earnings results of companies, change in government policies, geopolitical events, mergers & acquisitions, company restructuring, change in price of raw materials, one time dividends, natural calamities, new innovations etc.

The concept in this kind of trading is to identify trading opportunities based on events. It does require a fair understanding on fundamentals and technical analysis. You might wonder how technical analysis is relevant, but don't forget that stock markets anticipate events before they occur. So suppose an event is already priced in, it's best to change your stance.

Quantitative trading

Quantitative trading consists of trading strategies based on quantitative analysis, which rely on mathematical computations and number crunching to identify trading opportunities. As quantitative trading is generally used by financial institutions and hedge funds, the transactions are usually large in size and may involve the purchase and sale of hundreds of thousands of shares and other securities. However, quantitative trading is becoming more commonly used by individual investors.

Quantitative traders take advantage of modern technology, mathematics and the availability of comprehensive databases for making rational trading decisions.

Quantitative traders take a trading technique and create a model of it using mathematics, and then they develop a computer program that applies the model to historical market data.

Arbitrage Trading

"Arbitrage" trading is simply the trading of securities when the opportunity exists during the trading day to take advantage of differences in value between the markets the trades are made within. Arbitrage trading takes place all day long on most days that the markets are active.

Arbritrage is legally allowed. In fact arbitrage is responsible for a large part of the daily volumes on the NSE & BSE exchanges. Arbitrage is the practice of taking advantage of a price difference between two or more markets or exchanges. In Indian markets stocks are traded in two major exchanges – NSE (National Stock Exchange) and BSE (Bombay Stock Exchange), which means you can take advantage of buying the stock in one exchange and selling it in other and bag the difference as profit.