Popular Online Trading Styles
There are numerous methods and styles used by online traders to trade. The categorization of the online trading styles can be done using many criteria such as the trading products, the trading interval between buying and selling, methods/strategies employed for trading, etc.
Based on the product traded, online trading styles include stock trading, options trading, futures trading, commodity trading, forex trading, etc. Stock traders trade equities or shares from companies. Option traders trade options, which enable one to get or sell a right at specific time periods under specific market conditions. Online futures traders and online commodity traders trade contracts; contracts for products like crude oil and natural gas or contracts for treasury notes and bonds. Online FXGM forex traders trade currency pairs, they buy one currency and sell another one according to change rate changes.
Based on the interval between buying and selling of products online traders could be broadly classified directly into short-term traders and long-term investors. Usually, traders with trading interval significantly less than twelve months are known as the short-term trader and those with trading interval several years are known as long-term investors. Short-term investors form the majority of active traders, trade products based on short-term trends. They trade products usually based on its merits. Long-term investors trade with long-term goals; they are usually company/industry specialists want to purchase growing fields.
Short-term trading could be further classified directly into day trading, swing trading and position trading. Online day trading is the most active form of trading. Day traders trading interval doesn't exceed one day. They buy and sell products within seconds, minutes or hours for usually small gains. Day trading eliminates overnight risks. Day trading involves scalpers - those buy and sell massive amount shares/contracts within seconds or minutes for very small per-share gain, and momentum traders - trades in line with the trend pattern of specific shares/contracts within a day.
The buying and selling interval of online swing traders range from a few hours to 4 or 5 days. They, like day traders, trade shares/contracts based on slight fluctuations in price, but they are willing to hold their position until the next day. Online swing trading involves overnight risks but has gain percentage higher than that of day trading. Online position traders trade equities/contracts with an interval of days to months. They rely on long-term trends and company performances. They have a higher gain percentage and higher risks than online swing traders.
Based on the strategies followed online trading could be classified directly into Brother-in-law style -traders seek advice from brokers and other traders, Technical trading style- traders use advanced systems to discover trading trends, Economist trading style - traders rely upon economic predictions, Scuttlebutt trading style - trading based on information extracted from brokers and other sources, Value trading style - trading based on merits of individual stocks not to whole market, and Conscious trading style - mix of several of above styles to finding right opportunity.
