It is true that trading and investing share many similarities. But the reason why trading is more daunting for a beginner is how demanding it can be since you don’t just buy to hold for a very long period.
Thus, apart from knowing what trading is all about, you should also know that there are different forms of it. And not all will suit your personality or condition. Thus, you would have to figure out which one best aligns with your goals and opt for it.
As a beginner, you’ll need a great deal of research and learning to do. Therefore, an online platform like Luminablog.co.uk which shares information and reviews about financial companies such as these trading platforms online reviews will be a good addition to your learning portfolio.
Let’s now deliberate on these various trading forms.
Table of Contents
1. Day Trading
This has been described in many quarters as the beginner’s most go-to trading form. But what is of concern here is that day trading is not as easy as one may think. And this is where most beginners, due to their eagerness to make profits, tend to make mistakes.
Day trading demands perseverance and topnotch awareness for you to be able to successfully close deals before the day ends. More so, it is time-consuming as you have to keep watch at all times in order not to miss a window of opportunity to sell your stocks at a profit. With this, it would be hard to maintain another job as day trading is time-consuming.
2. Swing Trading
Unlike day trading, swing trading is less time demanding. In a swing trade, you keep your items for a short time, say, a couple of days or weeks before selling when a good chance presents itself.
Swing trading is a good choice for those who have other engagements as it does not require constant monitoring like day trading. However, it doesn’t mean that swing trading doesn’t have its downsides. There is a greater risk since you are holding for more than a day and the market may plummet.
3. Position Trading
Position trading goes at a snail pace. It is more of a patient and deliberate approach to long-term trends in the market. You can maintain your stance for weeks, months and even much longer than that.
This will give you more than enough room to do other things. Thus, it suits those with a regular job as little time is spent on it.
4. Systematic Trading
Popularly known as algorithmic trading, it is one in which strategies have been mapped out and are carried out by a computer or other technological devices.
One advantage of systematic trading is that you can give free rein to the computer so that it takes charge of all the vital tasks.
All these trading forms have their merits and demerits. Knowing which one will serve your needs better as a beginner is one of the foremost decisions you would have to take.