Before deciding which one is good for us lets first see the different types of trading and what they actually mean.
Intraday trading is all about taking a trade or a series of trades in stocks, commodities or Index and closing it the same day before market close. It requires higher level of emotional and psychological control on the part of the trader as there are lots of fluctuations intraday. It can involve sophisticated charting systems and advance level of technical analysis. The capital required can be lower than positional trades but the efforts required and cost involved are higher. Very few ppl can consistently make profits trading intraday as they have to outsmart the institutional players and experienced traders.
Positional trading is identifying stocks, commodities or index levels which as per technical analysis provides a good risk-reward for few days, weeks, months. The level can be due to the price being at support or resistance, demand or supply zone, breakouts and many other technical reasons. It is mainly practiced on higher time frames like daily, weekly charts and requires lesser time to analyze. The random fluctuations are less leading to lower confusion.
Swing trade is held for more than 1 day but for shorter time compared to Positional trading. It is based on certain pre-set rules/parameters which when satisfied trigger a trade. Swing traders try to profit from the volatility in price moves.
Scalping is the fastest trading strategy employed by active traders. Scalpers try to benefit from the temporary imbalance between the demand and supply. They are not held for longer moves but rather booked within a very short time. Involves higher cost as many trades are taken in a day. Risk is low resulting in lower profit. Scalping requires a high level of understanding of the market hence it is best suited for experienced traders.
Beginners in stock market are always attracted to intraday trading due to the lower capital requirement, no overnight risk and also due to the mis-selling of advisory services by so called market experts providing tips, calls with false promises of quick profits or by selling a course or strategy which can be learnt by putting in few hours for 1-2 days.
In reality there are no short cuts to success. Everyone has to learn alphabets before learning how to frame words and sentences. One cannot compose a song using a strategy but has to learn music starting from basics and only with hard work, experience one can write a song. Even a F1 car racer has to obtain a basic driving license and practice regular driving before qualifying as an F1 driver.
Similarly, a beginner has to focus on basics first then master positional trading before even thinking of doing intraday or scalping.
After being comfortable with Positional trading, one can try intraday, scalping or swing trading and continue with what they feel comfortable with.
Everyone is unique so are their trading styles. The result of breaking this flow will always be terrible.
Ankit has 15 years of experience in Financial Markets of which over 10 years was with NSE and Standard Chartered Bank FM Surveillance within Compliance and 5 years as a Proprietary Trader dealing in Indian Indices, Stocks and Commodities. He loves sharing his experience with everyone wishing to begin their journey in Indian capital markets, helping them avoid the common mistakes people commit and providing a proper roadmap to anyone who is interested in direct market investments.
