If you are new to trading, you should know that trading refers to the activity of buying and selling financial assets, such as bonds, with the goal of generating profits. The underlying idea is to take advantage of potential price fluctuations. Usually, traders implement various strategies and techniques to make important decisions and generate profits from the trade. 

With that said, here are the major trading types:

Day Trading

Day trading is one of the most common trading types that involves the act of buying and selling assets. Day trading takes place within the same trade day, which is usually from nine to three. The goal of day trading is to benefit from price fluctuations on a short-term basis. When it comes to day trading, day traders typically close their trading positions by the end of the trading day with the objective of avoiding the risks of fluctuating prices overnight. 

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Automated Trading

Automated trading essentially relies on algorithms or computer programs to execute trades. Algorithmic traders follow very specific trading techniques and focus on making rather fast decisions that are based on potentially predetermined criteria. This trading type is essentially dependent on programming skills and solid quantitative analysis. 

Position Trading

Another major trading type is position trading, which focuses on long-term trends that can expand over weeks, months, and even years. Position traders identify major trading market moves and maintain positions for extensive periods with the objective of profiting from the expected trends. Position traders invest their time and effort in detecting the trends and also developing a clear understanding of financial factors, as well as the trading market cycles. 

Also, position traders must exhibit the willingness to bear short-term price fluctuations as they keep in mind that they will benefit from higher returns over time. 

Swing Trading

Compared to day trading, swing trading involves holding trading positions overnight for several days. The objective is to secure profits from the fluctuations in prices. Swing trading typically involves the analysis of technical indicators along with other factors that influence the trading market. 

Swing trading occupies a sweet spot between long-term investing and day trading, where swing traders aim for profit from the interim price movements within a larger trading trend. 

Scalping

Scalping is essentially a short-term trading strategy where traders try to profit from tiny price changes. Typically, traders in scalping hold their assets for short periods, which are as short as minutes and even seconds. While holding onto their assets for a short time, these traders collect multiple small gains throughout the trading day. 

Scalping is typically for the experts in market liquidity who are comfortable trading at an ultra-high speed. 

Final Thoughts

Now that you know the major trading types, you might want to take some more time to learn the depths of the financial markets, potential trading strategies, and the potential risks that are linked with the trading markets. Once you have developed a strong understanding of the trading and financial markets, you are all set to start trading.