Reading is like doing meditation. It's very personal. You cannot blindly follow someone and expect to reach Nirvana. In the same way a trader can only be successful if it develops his own trading style.
Based on his personal considerations and expectations, blindly copying anyone would only lead to failure.
In this session, we will explore five styles of trading that are common in the Indian stock market so that you can pick and choose what works best for you.
In my over 16 years of experience in the stock market, I have broadly seen five trading styles. It used to be just three but now it's five times are changing first style of trading is probably the most common and it's called positional trading. A positional trader holds a position for a few weeks to a few months. The idea is to catch a broader trend in the market and stay with the trend as long as it continues positioning trades are usually taken on the index such as nifty and bank nifty and occasionally on individual stocks, the direction of the trade on the index can be long or short. But when it comes to individual stocks, positional trades mostly tend to be on the long side. positional trading is great for working professionals who have full time jobs and who cannot devote a lot of time for trading, you probably will be taking two to three trades in a month and rest of the time just monitoring the trades. If you want to be a positional trader, you need to have a lot of patience, you will also need to develop a good understanding of the fundamental and technical analysis and a good sense of the overall market trends. The second style of trading is called swing trading, a swing trader holds a position for a few days up to a week there are a lot of swing trading strategies, but most of them are based on momentum event based or mean reversion swing trades are taken both on the stock and on the indices. In general, I have seen that there are more swing trading opportunities in stock then index, but index tends to be much less volatile and hence less risky. The direction of the swing. data on the index can be on the long side or on the short side. But when it comes to the individual stocks, swing trades are mostly taken on the long side. Swing Trading requires more time commitment than positional trading, because you will need to stay on top of the news flow and be very much in tune with the market dynamics. If you want to be a swing trader, you will have to do your homework on the index and on the stocks stay on top of the news and be aware of the upcoming events that can drive the market or stocks your number of trades will be going up as compared to the positional traders because you're spotting more trading opportunities, but at the same time, you have to keep an eye on the brokerage SDT and other charges. Third style of trading is intraday trading. Probably the most controversial and intraday trader buys and sells within the same trading session. The direction of the trade can be long or short. The biggest advantage of intraday trading is that there is no overnight risk involved like that in positional or swing trading. The other benefit of being an intraday trader is that you can operate with lower capital than positional or swing trades brokers in India preferred stock to high leverage that you don't need to bring a lot of money to the table however, you've got to bring your A game when it comes to intraday trading. You have to get a really good at spotting intraday trading opportunities be very quick in cutting losses and be very patient with your profitable trades. The knowledge of fundamental and technical analysis helps Of course, but there is much more required than that. Now, a lot of people bash intraday trading and it has become some sort of a fashion to equate it to gambling. Although the intention of some of these people might be good. I sincerely believe that a lot of people who bash intraday trading, they don't actually understand how intraday trading works. an intraday trader doesn't make money by speculation he does so by reacting to the market and by aligning his trades in the markets direction. But broadly, I agree that intraday trading is not everyone's cup of tea. This is the game for the top level athletes who have the mental agility and the emotional discipline to stick to their trading plans. Anyway, we will take this topic separately in another video. The fourth style of trading is called scalping, technically speaking, it's a kind of an intraday trade, but it's very unique in its own approach. What separates a scalper from a regular intraday trader is that he stays in the position for a very short amount of time. It can be for a few minutes or it can be even for a few seconds. The idea is to get in and out of a trade as quickly as possible. The trades can be taken on the long side or on the short side, mostly in dices. But sometimes they can also be on high liquidity stocks like reliance or TCS, the scalper is not expecting to make 10% or 15% in a trade. In fact, most of the scalpers are happy with even point 5% of the gains because they take much bigger positions than regular traders and even a point 5% gain can mean a lot of profits. But a scalpers life is hard because he's basically in front of the screen all day long and taking tons of trades during that time over a period of time. This can take physical and emotional toll on their bodies, you should consider scalping only if you have that kind of a grid fifth, and the final style of trading is called algo. Trading, which has gained some serious following in the recent years and algo trader develops algorithms Based on time tested patterns and let them loose in the market like robots. These robots execute the algos with precision and the trader doesn't have to deal with all the emotions of greed and fear that comes from profits and losses. Algo trading is becoming very popular in India, especially in the tech community. It is also great for people who are working in jobs and who cannot sit in front of the screen all day long. It's much easier to build an algorithm one time and just keep fine tuning it as time goes. However, it's easier said than done, as I have realized personally algo trading works very well when the context of the market is known. But when the context of the market is changing, it becomes very hard for algos to adapt to the new environment. One more thing a lot of people confuse algo trading with high frequency trading, which is an entirely different game altogether. We will be making special videos on algo trading scalping and intraday trading soon stay tuned for that. Alright guys, these were the five styles of trading I hope you are better informed about how they work and what is really required to succeed in them.
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