Trading is relatively easy to understand and fundamentally it is simply buying and selling things. There is always a buyer and seller of the good. It means buying a particular product when its price is low and selling it when it prices in the market increases.
Types of trading
Four types of trading are divided based on the period between buying and selling trades. These include-
- Intraday trading- This is the first type of trading in which the trades are kept for one day. The trader buys the trade at a lower rate and sells it in one day. The time duration between buying and selling of trade is one day.
- Swing trading- In this type of trading, the trade is kept with the trader for 10 days. The trader first buys the share and then sell it when it’s price increases within 10 days. The duration between the buying and selling of trade or share is 10 days.
- Positional trading- In this type of trading, the time gap between the date of buying of trade and selling of trade is 100 days. The traders buy the share at a low price and sell it after 100 days when the price in the market increases.
- Investing- in investing, the shares are traded like in NASDAQ: ADP at https://www.webull.com/quote/nasdaq-adp for more numbers or days. Investing in a broader sense is similar to trading but the investment is made for many years whereas trading maybe for days, weeks, months, or years.
Advantages of trading
There are many advantages of trading stocks which includes-
- It is easy to buy and sell trades- This is the first advantage of trading in stocks. You don’t need to go anywhere to earn profits rather you can easily buy and sell trades online.
- Traders get higher interest rate- When you are trading, you tend to get more returns as compared to other investment types like in gold, bonds, real estate, mutual funds, etc.
- You get bonuses when the company makes a profit- When you trade with a company you can get dividends and bonuses immediately when the company makes a profit.
Disadvantages Of trading
The disadvantages of trading in stocks include-
- It is unpredictable to guess the profit or loss- In trading, you can predict whether the company will make profit or loss.
- It is a long process- Trading may be short term or long term but people mostly prefer long term because it gives more profit. But the disadvantage is that you have to wait more time to get the profit.
The main aim of trading is to earn a profit. As in the stock market, you buy shares of a company at a low price and sell them when the price increases. Trading is a part of stock market. You can buy the stock share at trading software.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.