The stock market in India is seeing a surge in retail investors. As per the Mint, 44.7 lakh retail investor accounts were opened in only two months at the start of the fiscal year 2021-22.
With online stock trading platform providing ease in online trading, the numbers are further increasing. It is essential to trade in the stock market with thorough knowledge in such a case. Otherwise, it can lead to unnecessary capital loss.
Here are the top 5 trading strategies that every trader should know!
Trend Trading
Under trend trading strategy, the trader uses technical analysis to understand the trend. The trading decisions are then made accordingly. Technical analysis helps to understand the price movements and the trend associated with the movement of the stock. The essential thing is that the trader should be adaptable and alert as the trend changes quickly.
Gap Trading
In stock market terms, a Gap means an increase or decrease in the price, with nothing in between. This implies that the market has opened at a different price than its previous close. A gap trader benefits from this price gap. If the opening price is higher than the previous close, it depicts going for a ‘long’ position, whereas if the opening price is lower than the previous close, it depicts going for a ‘short’ position.
Day Trading
Also known as intraday trading, one of the most commonly found trading strategies among stock market enthusiasts. This is for those traders who are active in the stock market and aim to benefit from the stock market fluctuations between the open and close hours of the market. To minimise the risk, day traders usually close all the positions held in a day to prevent the fluctuations due to overnight market volatility.
Scalping Trading
Traders place very short-term trades with small price movements under the scalping strategy. The objective is to make small profits for each trade and accumulate all such small profits. For scalping strategy, it is essential to have a solid exit strategy, as a single loss can wipe off all other small profits accumulated over multiple trading sessions. Their focus is on increasing the number of small trading wins.
Position Trading
When a trader uses a position trading strategy, he holds a particular position in the stock market for a considerable period, ranging from months to years. Minor fluctuations are ignored in the quest for long-term gains. Fundamental analysis is employed to find the correct stock, and evaluation is done of the potential price trend in the market.
In a Nutshell
The stock market is full of strategies, and as a trader, you can employ the one that best suits you. Whatever the strategy employed, it is crucial to do thorough research before employing any strategy. Also, selecting an online stock trading platform can change the experience of your trading.
