Know the most common types of trading on the market

Know the most common types of trading on the market

Before embarking on the financial market, it is very important to know the different types of transactions. Sea Day, Swing or Position Trade and even medium and long-term transactions (Buy & Hold). These terms may seem very complicated at first. But soon you will see that there is a fundamental difference between them: the time you are going to negotiate. understand:

Every investor has a plan for their investments. And it is precisely this plan that will help you define your strategy, as well as the time needed to operate in applications such as the stock market and the currency. In this way, it is essential that you prepare to work as precisely as possible. It's about taking calculated risks and knowing when to expect results.

Among the most common transactions (short-term transactions) are those of the currency. And these negotiations are classified in: Day Trade - they last less than 24 hours; Swing Trade - take two to five days and trade position - in the short term because they last a few weeks or even months.

All of these definitions and terms that you can know in today's article. Do it and take a step forward towards your financial independence!

Good reading!
What is the day trade

As we have seen, day trading is always closed the same day, but it can only last a few minutes or hours. This is the shortest of the types of trading. The purchase can be at the opening of the financial market and the sale at closing, or even with a difference of seconds: both are called day trade.

Since this is a fast-paced term, the trader needs a lot of knowledge and experience. In addition to speed, it is also common to operate with day trading to obtain small quantities. This is because the final sum can bring an interesting return. Then summarize and see some details:

The characteristics of the day trading: several short-term trading (less than 24 hours) at the same time, they need very liquid assets, require dedication, the profits are fast and the benefits of each operation can be small, but the result final very good. Knowledge in technical analysis and extensive experience on the part of the investor are essential.
Swing Trade

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Swing trading is also one of the most common types of stock trading, but it is a longer term transaction. The merchant who uses the swing trade trades on average within two to five days. No more than that. The idea is to stay in position until the time set to achieve the goals.

In this context, the swing trader usually performs fewer transactions in parallel. Factor that does not eliminate the need for equal liquidity of assets as in day trading. Other prerequisites are mastery of technical analysis, patience, discipline, availability to accompany graphics and trends.

The characteristics of swing trading: less short-term trading (two to five days) at the same time, they need very liquid assets, require dedication, patience and discipline, perhaps greater consistency of results and knowledge is essential in technical analysis.

Trade position

At the point of negotiation, negotiations can last for a few weeks or even months. Since the objective is to increase profitability compared to other types of transactions, the investor keeps few open orders at the same time. Liquidity is important, but it's not essential like the day and the swing trade. Here, the term to use is larger.

The characteristics of the trade position: few transactions can be open at the same time (weekly), liquidity is not the most important factor, requires patience, discipline and emotional control, there may be more fundamentalist coherence See in this publication other alternatives to increase investment wealth.
Medium and long term

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Now, check the other modes of operation, different from the types of trading we saw above:

Medium term: longer term negotiations, one to five years. It is advisable to have some experience of the market and notions of technical and fundamentalist analysis.

Long term: also known as Buy & Hold, it includes five-year operations. They are used by investors looking to supplement their retirement in the future. It is important to know the fundamentalist analysis.
Costs and risks

In both the stock market and the Forex, the manual day trader must have enough time to negotiate. And, as he will perform several operations a day, this will result in significant costs with corrections and other fees. The incidence of income tax is also higher for day trading operations. Day trader pays 20% IR instead of 15% normal. On top of that, you still have to face the daily risk of not being able to buy or sell your assets.

Already in swing trading, operations are smaller and, as a result, the capital, costs and risks involved are also lower. Therefore, the movements of the graphs are easier to analyze because there is a longer time (but not much!) For that. Remember the importance of managing the risk well, apply the stops by hand, follow the strategy and keep a cool head. The same thing applies to position trading.
How to choose my trading types?

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Have you noticed how the operating period is the main difference between the types of trading? And also how each of the modalities requires specific skills of the trader? Therefore, to choose the one that best fits your profile, make a clear assessment of your lifestyle.

What is the time available to invest? How much risk do you want and can you run to achieve the desired results? It is only with these answers that you will be able to reach an affirmed definition. Remember that it is up to the investor (trader) to establish his own strategy and chart the way forward in his investments.