Different Types of Trading

The world of trading can be a bit intimidating to anyone who does not have much of an experience in it. In fact, as most experienced traders will tell you, there are more than a few types of trading types possible and opting for one can be rather confusing. Not to worry, we shall be covering here most of the basic forms of trading so that you can have an easier time deciding on exactly what you want to opt for.

To start with, trading can be classified into 2 different categories based on the type of trading. The first is based on time and the second on the type of asset.

If we classify a trade on the basis of time period, it can be of 4 types:

  • Day trading

As the name suggests, this is the type of trading when the assets that are bought are sold within a day. In short, it is meant for traders who like fast action and can act on the spur of the moment. If you cannot handle pressure, this is not the type of trading you should opt for. Further classifications of day trading include pattern trading (when the underlying patterns of the trade need to be taken advantage of), arbitrage (profits made from slight price differences in different markets), news trading (identifying potentials of profit from sensitive trades) etc.

  • Short Term Trading

This is the trading that occurs when the assets are sold within a few days to a few weeks’ worth of time. Pattern trading can also be classified as short term trading.

  • Medium Term Trading

This kind of trading is based on stop loss. The trade usually occurs within a period of a few weeks to a few months. High time period Swing Trading is an example of medium-term trading.

  • Long Term Trading

As the name suggests, long term trades occur over a long period of time. This varies from a few months to a few years. The usual category for these trades occurs from company stock analyses. Stock trading based on company dividends is a prime example of long terms trading.

Aside from trading classification on the basis of a time period, another very popular classification is done on the basis of the kind of asset traded. As can be understood, the world of trading is quite vast. You can trade in multiple assets at the same time or trade in one asset. However, a fundamental understanding in exactly what you want to trade in is of primary importance to make a good profit.

The usual classifications on asset-based trading are:

  • Indices Binary options Trading

This is a relatively new form of trading that is becoming very popular with everyone. The reason is the simplicity of executing the trade and the relatively low amount of time needed to see the profits coming in. The premise is very simple. A trader bets on the direction a stock’s price will go. If the prediction matches, he is offered a profit, else the amount is forfeit. Unlike stock trading, this can be done with very small amounts of money and the profit is both instantaneous and easy to understand.

  • Currency/Forex Trading

If you are even remotely interested in trading, you probably know about the currency trading. The idea is that a trader can spend on currency to buy another. The trade is done in the form of a currency pair. Almost any major pair of currency can be traded including USD, Euro, JPY etc. The reason for currency pair trading can be due to 2 reasons: the first is to convert one currency into another for the sake of ease of spending in case of various reasons (like an overseas vacation) and the other is to identify a point of profit where one currency is gaining in terms of another. The profits can be significant here, however, sensitive information needs to be isolated fast for potential leads in currency trading.

  • Commodity Binary Options

This is closer to the idea of commodity trading, but without the hassle of having to invest a major amount in actually buying the commodity. You can buy commodities like Gold, oil, Copper or Silver based on their values directly. You are given a time period and you can freely trade with the commodities you choose without going into the intricacies of how it all works.

  • Stock trading

This is the most common form of trading. Stocks and shares of various companies rise and fall over any given period of time. Buying them at a low price and selling them at high is the most basic form of earning profit. In short, identifying fluctuating market values of stocks based on the news of the companies associated with them forms the crux of share trading. Any and all kinds of stocks, from major companies like Google and Facebook to small companies who have opened up their stocks to the public are open for trading via the various major stock exchanges around the world (New York, Japan, European etc.).

Now that you know the kinds of trading available to you, feel free to experiment and check out everything to understand the one you are comfortable with. There is no fixed path for trading, so it is up to you to find your path. However, keep in mind that trading responsibly is just as important as trading with risk. Be ready for consequences if a trade does not go the way you planned. Check out advice on the best binary options software at Trusted Binary Reviews. Also there is some good advice on quora.com

Trade sensibly, trade profitably.