Online trading is catching on in a real big way and a lot of people are earning good returns on investments in this field and today this is one of the main investment portfolios for several of us who have money to put into investments.
Different styles of online trading
There are different trading styles of online trading categorized mainly as per the trading products, trading interval between buying and selling, methods and strategies used for trading, and other such things seeking to profit from market movements.
There are various online trading styles based on the products traded which could be stocks, options, futures, commodities, Forex, etc.
In stock trading we trade in equities or shares of different companies while in option trading it is buying or selling a right at specific time periods when specific market conditions occur.
Futures and commodities trade contracts for products such as natural gas, crude oil, or could be treasury notes and bonds.
Whereas online forex trading involves currency pairs where one currency is bought and another one sold as per the exchange rate changes to make profits out of it.
Depending upon the interval between buying and selling online trading can be classified mainly into short term trading and long term investing. Short term traders are those whose trading interval is less than a year whereas long term investors are those whose trading interval goes beyond a year.
Most of the online active trade is conducted by the short term traders; they trade products as per their merits while the long term investors who are considered industry specialists have long term goals with a view to invest in a growing field.
Classification of short term trading
Short term trading can further be classified into day trading, swing trading and position trading of which day trading is the most active.
Online day traders trading interval does not go beyond a day; they buy and sell products in just seconds targeting small gains usually. This type of trading has no overnight risk and involves scalpers; these are the ones that buy and sell big number of shares or contracts in as short a time as minutes or seconds satisfied with a very small gain per share.
Here the buying and selling interval of trading is between 4 or 5 days and they too like day trades consider slight price fluctuations but they have no problem holding their position till the next day.
Online swing trading does face overnight risks but they enjoy gain percentage higher than the day traders do.
Online position trading involves trading in equities or contracts with a trading interval that ranges between a couple of days to months. This type of trading depends on the long term trends prevalent in the market and company performance. Their gain percentage is much higher and so also is the risk when compared to online swing trading.
Now that you have in brief the different styles of online trading make your choice and invest and here’s wishing you happy and heavy profit making!