What are the 4 Common Trading Strategies?

Overview of the stock market and trading

The stock market is the place where millions of shares of the various companies are traded. Every nation has its own stock market.Some shares provide an attractive rate of return; some share provides a mediocre rate of return; some provide a dismal rate of return while some others provide a negative return to the traders or investors. 

If you're new to stock market investing, then it would be better for you to read the article that I've recently written on the basic financial concepts that every person should know about. In the stock market, you will either find the short-term traders or the long-term investors. The short-term traders are also called speculators, and they aim to get quick profit in the short period of time. 

What are the 4 common trading strategies? 

There are 4 common trading strategies that are used all over the world. The selection of the strategy depends on the person's preference. Here are the 4 common trading strategies that are widely used in the stock investing. 

1. Day Trading: The first type of trading strategy used by many traders is a day trading strategy. They day traders buy and sell all their shares within a day. They don't hold their stocks the next day, and they aim to gain profit from the minor fluctuation in a day. 

The day traders may even hold a stock of a company for a few minutes or even seconds, then sell it for a profit. There are day trading courses to gain knowledge about the day trading. However, you need to take notice of every second's price fluctuation if you want to be a day trader. 

2. Swing Trading: The second trading strategy used by many people around the world is a swing trading strategy. In this strategy, the person buys and holds the stocks for a few days to a few weeks. The trader tries to take advantage of the trend, and he also puts the stop/loss to get out of the trade to minimize his/her losses. 

3. Position Trading: The third trading strategy is a position trading, which is somewhat similar to swing trading except for the fact that the trader aims to take a long position on a stock. The trader usually holds the stock for a few weeks to even months with the motive of gaining a good profit from the trade. Like swing traders, the position traders also put the stop/loss point. 

4. Investing: The final strategy is the investing strategy, and the people who hold the stocks for 1 or more than 1 year is called an investor. The investors generally don't put stop/loss, and they also don't care much about short-term price fluctuations. They focus on the quarterly reports, a performance of the company, and other fundamentals of the company before they decide to invest in that specific company. 

Conclusion

If you're willing to invest in the stock market, then you should select 1 of the 4 strategies. In my view, it's not a good choice to change your trading style too often. It takes a lot of time to learn a specific strategy. 

Moreover, there are too many videos that may provide low-quality education on their channel. Before starting to invest, you should read some books on investing, and you should also be able to make your own judgment before you purchase a stock. I will write an article on some of the top books to read that every investor to read in the near future. 

If you have any opinions or suggestions, then please comment on the comment section of this article. Also, share this article with your friends and relatives who are eager to invest in stocks.  

Share with us your trading strategy and also tell us why you choose that specific trading strategy.