Archive for August 25th, 2010

The Different Types of Stock Market Trading

Wednesday, August 25th, 2010

The stock market is a place where long term securities are bought and sold. It is a market used to raise long term finances for the businesses and provides the businesses with the necessary liquidity.

There are different participants in a stock exchange and each one of them has their own objectives. They carry their share trading on the basis of their objectives. The different kinds of share trading which are in practice are intraday trading, swing trading, commodity trading etc. Trading can be done both on the equities as well as on commodities. Trading on commodities is known as commodity trading. Commodity trading includes trading of commodities like gold, crude, silver, nickel, lead etc. The Indian commodity market opens at 9:55 in the morning and functions till 11:30 in the night. The commodity trading is largely influenced by the change in price of the commodities in the international commodities market. In India a large number of investors do engage in commodity trading. Most of the large players in commodity trading are traders like jewelers etc. They see commodity trading as a tool to mitigate the risks of their business. In commodity trading the commodities are bought and sold in a lot or individually. The parties involved in commodity trading may sometime go for margin money and if the value of their security falls down then they cannot hold it for a longer period of time as they are in short of funds.

Intraday trading and swing trading are two tools of speculation. Swing trading is a practice where by the instrument is bought or sold at the end of volatility in price. So swing trading makes use of the volatility of the share price for a period of one week. Intraday trading is the most commonly used speculative tool in our stock exchanges. In intraday trading, the securities that are brought on that day are sold before the market closes for that day. So people who indulge in intraday trading are not real investors and they are really interested in making quick profits. Intraday trading can give you quick profits as well as the chances for loss making are many when compared to delivery trading. Most people who indulge in intraday trading end up making losses because they do not know anything about the stock exchanges and listening to others words them start intraday trading expecting quick profits. Most people who go for intraday trading use the margin money system and therefore they cannot hold their shares for a longer time due to the shortage of funds.