What is Stock Trading?

What is Stock Trading?

To put it simply, when we exchange goods and services with one another in terms of cash or barter system it is called trading but in financial markets it is a little different because here we are trying to buy one company’s shares and when the value increases, we sell them in a very short span of time.
Here at Trade Tales you’ll learn how to trade and invest in the financial markets efficiently but let’s first understand what is like to trade in the financial markets?

Trading in Financial markets is same as we’ve mentioned above but think of a stock trader- what they actually do is buy shares of a company (or a small part) of a company and sell it when the prices go up. Now traders can also be classified into two categories mainly-
Intraday traders.
Swing traders.

Buy today sell tomorrow vice- versa traders.

Intraday Traders are the one who trade between (9:15 – 3:30) Indian standard time or between the Open and Close of a day. They mainly focus on trading hot stocks which have a potential of very good momentum or are at least volatile. All the orders for buy/ sell are squared off within the trading hours. Well, it requires high expertise to trade in stocks and indices on intraday basis. Along with that, one must have a good amount of capital to mitigate the risk.

Swing Traders mainly buy and hold till their desired targets are not achieved and their time span can be from 1 Day to 2-3 months. Swing trading carries lesser risk than intraday trading as sometimes market corrects very fast on account of any bad news so at that time if a trader is long in any stock, future or options he/she has to bear the consequences while the swing trader can hold the stock and has an option of doing discounted shopping if the conviction towards the upside of a trade is high.

Buy Today Sell Tomorrow traders are the guys who mainly trade gaps or the ones who estimate the moves well in advance and then trade them within 2 days. Let’s take one example of BTST traders-

Suppose Mr. Him is short on a stock ABC and aftermarket hours the company is going to announce the quarterly results which the trader has estimated to be bad and He is now expecting that the stock might gap down tomorrow. In this case, the trade is going to be Sell today buy tomorrow as the trader is short on ABC. If the stock gap downs tomorrow Mr. Him is going to be in good profits and if not then he has to bear the risk and square off the trade next day. Taking positions today and squaring it off tomorrow is called BTST or STBT.

There are ‘N’ number of instruments in which one can trade like stocks, crypto, commodities and indices. One can always plan according to their lifestyle in which instruments they want to trade ex- Office goers or salaried people mainly take swing trades in stocks and can trade intraday in commodities as it has long active hours as compared to stock markets.

After understanding what trading is and what are the main categories of traders, Don’t forget to tell us in the comments which one you wish to be?