The trading world brings a number of opportunities for traders. It is due to the immense number of opportunities in the stock market, given its dynamism, traders can choose from a wide variety of trading styles available. At this instant, it becomes extremely crucial for traders to opt for the trading style that best suits their preferences and personality. Besides opting for the best trading platform in India, the trading style becomes extremely important.

The trading style is a reflection of the trader’s psychology. For gaining maximum revenue a trader must select a trading style that works in synchronization with your mind. For example, an individual who aims at generating fixed returns will perform better with options trading as compared to his performance with swing trading strategies and vice versa. Interestingly, no trading style is best, it is your psychology that helps you ace the game. After looking at the profits recorded at the best stock broker in India, we bring to you the trading styles that most profited the traders.

1. Intraday Trading - Intraday trading is the most popular technique among Indian retail traders which involves squaring off positions before the market’s closing hours. The philosophy behind this technique is that overnight exposure to trade is risky. In this technique, traders quickly book profits or losses and handle multiple trades every single day. It is the best bet for people who don’t pay much attention to fundamentals or other important aspects that are beneficial for an investor in the long-run. Traders in this technique heavily emphasize timing entries and exits, money management, and position sizing appropriately.

2. Swing Trading - The major difference between swing trading and intraday trading is the timeframe. Swing traders generally emphasize on the prediction of overnight short-term fluctuation of stock prices. This is why positions in this trading style last anywhere between day 1 to a few weeks. Swing traders generally use lesser leverage than intraday traders. Given the overnight risk involved the Indian stockbrokers in India levy Exposure + SPAN margins. This way it enables the traders extended firepower to traders for holding positions for longer timeframes and withstanding overnight price movements, giving them a chance to record higher profits per trade. A large number of chartists and technical traders widely acknowledge this trading technique. This is the best fit for individuals who like to rely on technical analysis of short-term price fluctuations.

3. Positional Trading - This trading style is widely different from swing trading as it doesn’t pay much attention to minor short-term fluctuations. Positional trading has lesser leverage involved than swing trading. The positional traders have a higher holding timeframe for each trade as these types of traders anticipate bigger future price movements. These traders emphasize a lot on timing the market as these traders are capable of weathering the storm and can wait for a few months for recoding a large gain. The focus of such traders oscillates between a hybrid combination of technical and fundamentals.

4. Options strategies - If an individual has a mathematical and objective thought process, giving prime importance to measured and more defined outcomes then trading options strategies might entice them. Strategy formulation is the most important part here. It takes a lot of time for traders to become proficient and start making well performing strategies. It is a hard task for seamless implementation of such strategies which is why a lesser number of people opt for options trading.

5. Trading based on technical analysis – Every single trading activity involves technical analysis due to the involved diversity and different approaches available for analyzing supply and demand in the stock market. As long as a person knows how to apply this technical analysis then he can be a swing trader, day trader or positional trader. What is essential is the underlying technical knowledge.

6. Trading based on money flows - This technique is based on DII stock inflow and outflow, FII inflows, promoter deals, open interest analysis, gross delivery data, stake sales, index rebalancing, etc. This data has gained utmost importance due to data’s vitality for identifying near-term trends of the stock market. There’s a huge chunk of professional traders that give utmost priority to such information and then complement this with technical analysis of indices and stocks.

7. Event Based Trading - This is a unique trading style that is itself based on the occurrence of events. They involve events that have occurred in the past or are about to occur. These events range between a wide variety of spectrum including changes in policies of the government, significant geopolitical events, profit record of companies, company restructuring, acquisitions and mergers, fluctuation in raw material rates, natural calamities, newer innovations, one-time dividends etc. the traders adopting this trade type, trade only on specific occasions or trade after a significant happening.

8. Quantitative trading - Many people confuse this with automated algorithmic trading and high-frequency trading but both of these things are widely different. Quantitative analysis involves stock analysis on their statistical performance. This type of trading necessarily not be HFT or based on algorithmic order execution. Quantitative trading heavily involves the use of computer models for stock analysis which in some way increases efficiency.

9. Arbitrage Trading - Arbitrage is reserved only for the institutional traders and prop trading firms as it requires humongous network speed and doesn’t want superior analytical skills. The gains from arbitrage trading are no more lucrative, with strategies getting a notch advanced and have an element of risk involved.

10. High-Frequency Trading - This trading style demands nothing but speed. The strategies of this trading technique require manipulating offers and bids at a highly rapid pace. This type of traders’ eye smallest profits per trade and furnish hundreds and thousands of transactions per day. Presently, hedge funds and institutions have complete dominance in this space, with microseconds being the margin of winning-losing a trade.

FAQs-

1. What is intraday trading?

Ans - It involves concluding buying selling trade transactions within a day.

2. Why is technical analysis important for traders?

Ans - Technical analysis helps traders interpret the market movements.

3. Can event based trading be furnished by a newbie?

Ans - Yes event based trading be furnished a newbie.