DAY TRADING OR INTRADAY TRADING
Also known as 'Intraday', positions are usually entered & exited within the same trading day. Obviously scalping fits into this category. Traders in general are interested in quicker, smaller amounts and making multiple trades per day.
Advantages:
Smaller take profit target = Smaller risk per trade.Because of the amount of trades being placed, compounding has a greater effect on your overall profits.
The Brokerage required for trading is very less.
No delivery charges.
With little money you can trade using the intraday margin given by the broking house.
You can make money faster.
Allows you to always be actively participating in the market
Because most positions are closed out at the end of the day, able to take advantage of interest earned in their account.
Risk control - positions are closed out overnight so unexpected market changes will not affect your bottom line.
Disadvantages:
If you don‘t have experience or Guidance, You can lose money faster.Time consuming - very difficult to trade properly if you have a full-time job.
Fast pace & necessary concentration can make day trading very stressful.
Discipline, proper money management, risk/reward and a profitable system are a lot more
important when day trading. Even a small mistake can result in a huge loss.
SWING TRADING
Swing trading is typically a short to intermediate term trend following system lasting anywhere from 1 to 30 days. Traders who swing trade typically look for trend reversals & retracements for their entry/exit points.
Advantages:
Manageable take profit and stop losses.Less time involved in actively trading - it is not necessary to ‗babysit‘ your trades.
Can be worked around a regular job - a couple of hours per day should suffice.
Less stressful than intraday trading.
Disadvantages:
Need to pay full amount to purchase the stocks.Susceptible to market disasters.
Can be difficult to learn and become profitable.
While it requires less time than day-trading, preparation and analyzing the markets is still necessary and can be time consuming. Tending your positions daily is a must!
Some traders have a tendency to develop emotional attachments to a trade.
Discipline and keeping emotions in check are very important. It is not uncommon to exit on a retrace or trend change only to have the market immediately change back and head in the original direction.
POSITIONAL TRADING
Position trading, also known as 'trend trading', can best be described as a 'buy and hold' method. Positions can be open for a few days, a few weeks, a few months or longer. They are also held during periods of minor retracement with the expectation that they will eventually continue trending in the desired direction.
Advantages:
The most forgiving type of trading - small mistakes are more easily absorbed in market movement and the size of your eventual profit.The easiest to learn. It is estimated that up to 25% of position traders learn to become profitable.
Easier to become successful with smaller startup capital.
Much easier to predict the market as in general you will be following the overall trend.
In general position trading is profitable.
Less time consuming than day trading.
Disadvantages:
Compounding has a lot less effect on profit than both intraday and swing trading.Because positions can be highly leveraged and trades remain open for extended periods of time, unable to reap consistent benefits of interest.
There is inherent risk in keeping positions open over night. It is quite possible for drastic changes to occur in the market while you sleep.
Money can be tied up for an extended period of time. This can prevent entry into new positions as they arise.
Because of the length of time involved in position trading, traders can experience significant drawdown with the expectation that it will turn around and start trending back in the desired direction. Psychologically this can have a very negative effect.
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