Types of Trading

Types of Trading

INTRODUCTION:

There are 3 types of traders in market.

1. Active long term investors: (Duration> 1 year)

2. Short term traders (Duration of position: 1 week to 1 year)

            (i)Positional trading

            (ii)Swing trading.

3.Ultrashort term traders (Close positions within a  week) -Intraday, and Buy Today Sell Tomorrow BTST

Swing trading means traders watch for Swing in the trend. And take contrarian position.

My NIFTY SIP is a type of Swing trading. If market goes higher and higher I do short selling in the hope of trend reversal.

LESSONS LEARNT:

1. For Long term investors– Fundamental analysis

            Traders – Technical analysis

            Tradevesting- BOTH

2. Time frame in charts depends on

            If your time horizon in YEARS then use EOD and Weekly charts.

            If your time horizon is MONTHS then use 4 Hours and EOD charts

            If your time horizon is in DAYS then use 10 min and 2 hour chart.

            If your time horizon is in HOURS then use 5 min and 30 min chart.

3. Momentum trading means trend is started and getting momentum, trader enter in the momentum and as soon as trend weakens he exits. RSI, MACD, PA are useful for this

4. Never Expect more than 30% Annual return for a successful trader. You may get more also.. But Expect less than 30% only. If someone expect >40-50% return then danger lies ahead.

5. The time horizon for trade vesting is 1 to 3 months

6. BTST trading tip

            Look at chart after 2.30 pm only.If any trend develops after 2.30 pm, it continues the next day..

            After 2.30, institution guys become active after lunch

7. The hedging depends upon market conditions. But, risky position is closed first, that too depends upon chart pattern

8. Mantra: Trading is 80% Psychology, 15 % Knowledge and 5% luck..