The stock market is one of a traditional method of money-making, and there are various methods of stock trading. Each method has its own pros and cons. The best and the most profitable trading type will depend on the kind of trader a person is. It is up to the traders to decide which method would suit them. Different individuals can choose different method depending on their trading style and risk appetite.
Some of the most widely-accepted methods of trading in the stock market are as follows:
- Delivery trading: Delivery trading is the method of buying and keeping the stocks in your Demat account for more than one day by not selling them on the same day. The time of keeping the stocks can vary from two days to more than a year. This method helps the trader to gain from a stock’s long-term profits. The traders are not required to book a loss.
- Intraday trading: This type of trading makes the trader buy and sell the stocks on the same day before the market closes. They need to track the market position the entire day, looking for a good opportunity to sell the stocks. Intraday trading is a great method of making fast profits provided that the investment is made in the right stocks.
- Margin trading: The traders must buy a set of securities for which an initial margin price needs to be paid to the broker. This margin is a percentage of the total traded portion predetermined by regulations from the Securities & Exchange Board of India (SEBI). This trading type makes use of leverages to multiply profits and losses.
- Short-sell trading: The traders believe that the market is bearish and act accordingly. They borrow shares from the brokers and sell them in the open market and wait until the price falls enough for them to buy the stocks back at a lower rate. The difference acquired by this process is the profit.
Before adopting a particular trading strategy, one must first consider their financial expectations and risk tolerance. Some of the above trading types are good for making a quick profit, while some can be used to grow wealth.