The Stock Market – A Primer

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by Better 72 Trades72

Which type of trading should I choose?

There are two styles of stock trading: one is day trading and the other is short term trading. In short term trading, the stocks are kept in possession for more than a single day without necessarily engaging in any form of transaction. This is to gain an advantageous edge over the market with respect to the stocks held in hand. Short term trading is also referred as swing trading. There is no specific time period for which the trader can hold the stocks; the trader is free to decide the duration for which he or she is going to hold the stocks before selling. The decision here will be based on the market trend and the stock performance. If a certain company's stock values are going down drastically, then the immediate tendency is to sell them to reduce the loss; however, if the trader sees a possibility of trend reversal, he or she will acquire more of these stocks to add to the existing stocks so that they can sell them at a profit when the trend reverses.

As opposed to swing trading/short term trading, day trading involves buying and selling in the same working day. The number of transactions per day varies here depending on the market trend. The crux is to keep low profit margins. It would require a specialist to do it right, and in the hands of an incompetent trader, it could result in severe loss. To avoid any undesirable loss, the rule of thumb followed by day traders is to exit all positions before the trading day closes. Day trading is highly risky. However, the profit rate can be very quick, and the same is true for loss. Many day traders have to take a bet on their trading decisions, making them more of a gambler than a stock trader.

While trying to identify the right type of trading for you, a number of factors have to be kept in mind. You must have your priorities right and know why you are entering into stock trading. Is it to make your living, or is it to give you some additional income? You must also make your decision based on the amount of time you can spend per day on trading activities. If you are going to use stock trading to make your living, then you will probably be spending the entire day in trading activities. In such a scenario, you can engage in day trading, which would require your focused efforts throughout the day. On the contrary, if you do not have enough time each day, then you must choose short term or swing trading.

Thirdly, you must decide how much risk you can endure without subjecting yourself to financial peril. Risk factor is high in day trading, and it would require the expertise of a seasoned trader to see profit in day trading. If you have someone who can guide you in the early stages when you are still new to stock trading, then you can slowly venture into day trading. If you are on your own, then look to experienced resources. Markay Latimer, an affiliate of BetterTrades, offers educational courses on all of the previously mentioned topics. Both Markay and BetterTrades have their own website, markaylatimer.com and bettertrades.com. Because of the broad appeal of stock trading, these educators have become mainstream hits.

Markay Latimer is author of this article on Markay Latimer of BetterTrades. Find more information about Stock Market Trader from BetterTrades here.

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