People are becoming highly interested in the stock market nowadays. It is a common option to trade in stocks as many are becoming aware of financial planning and wealth creation. For trading, one needs a Demat account in the first place. To promote participation, many service providers provide a free demat account. On top of this, one must know what a share is and the different forms of trading in the stock market. 

Definition of a Share in the Stock Market

Shares are units of ownership in a company. When a person buys a share, he buys into the company in a tiny way. The share market or stock market is a common place for the buying and selling of such shares. To raise capital, companies list their shares on the stock exchange, after which potential investors buy these shares through a broker who takes care of the demat account.

Various Types of Trading in the Stock Market

Trading in the stock market involves the buying and selling of shares to make profits. Different types of trading are suited to different risk appetites and investment goals. Gaining a fair understanding of these types would help one choose the alternative that meets their needs.

1. Intraday Trading

This is when shares are bought and sold on the same day in the trading arena. Traders wish to gain from short price changes on a level of intraday trading. Positions must be squared before the market closure. Active monitoring and quick decision-making are required for such trading. It suits those investors who can take the time during market hours and have a high risk tolerance.

2. Delivery Trading

In delivery trading, the traders buy shares and hold on for more than a day. The shares are transferred to the demat account. It is less risky than intraday trading. Good for those who have a medium to long-term view toward investment. This method makes the investors earn not only through capital appreciation but also through dividends.

3. Swing Trading

Swing trading requires the holding of shares for a few days to a few weeks to enjoy the benefit of price swings under consideration. Swing trading is intermediate between intraday trading and delivery trading. Traders analyze trends and technical indicators to make a decision. This trading style works for people who want to trade part-time and wait for a market move.

4. Positional trading

In positional trading, stocks are kept by traders for several weeks, months, or years, depending on fundamentals and trends in the market. This type of trading is for people with long-term financial goals and plenty of patience. Most of all, it does not warrant constant following and, therefore, is appealing to people who are otherwise busy with a full-time job.

5. Scalping

Scalping is often referred to as short-term trading where the traders want to achieve multiple small gains throughout the day. Hence, they will execute large numbers of trades on small price movements. Scalping requires swift decision-making abilities and superior technical analysis. It is best suited for individuals who have extensive trading experience and have all the requisite trading infrastructure.

Which one Suits You?

Different factors like time availability, risk tolerance, market knowledge, and investment goals govern a person’s ability to choose whether or not that trading style is suitable for him.

For an absolute beginner, delivery trading is the proper trading style if he/she prefers to stand aside and observe the market behavior over a period.

If one is ready to bear the risk and can watch the movement of the market, then intraday trades become a candidate.

If your time in the markets is rather limited, but you would still enjoy seeing some benefit from short-term movements, swing trades would suit you.

Should you want to pin your strategies on long-term wealth creation, then positional trading would set well for you.

You should avoid scalping unless you are highly skillful with some very quick gains in mind.

Conclusion

Knowing the basics of opening a free demat account, understanding shares in the share market, and knowing the various types of trading are helpful to a person in making decisions. Each kind of trading has its unique share of risks and benefits. Depending on personal goals, risk appetite, and availability in time, one may select an appropriate trading style. It is important to start your journey with good knowledge and treatment to take on the stock market successfully.