stock market trading for beginners / பங்குசந்தை ஒரு பார்வை / Tamil / Salem Nirmal



Stock market traders tend to choose one of the many trading strategies based on their financial goal, their orientation towards stock trading and the time period they want to stay invested for. Broadly speaking, there are two key forms of trading: short-term and long-term.
But when you divide the forms of trading based on investment strategies, there is technical trading and fundamental trading. And when we categorise the forms of trading based on the time period, there is intraday trading, swing trading and positional trading. So, these different forms of trading tend to overlap with each other because of the common features they share.
For instance, technical trading is similar to intraday trading, and fundamental trading shares some features with positional trading.
Here we give a lowdown on the key categories of stock market trading:

Intraday trading

Intraday trading is also known as day trading. If an investor buys and sells stocks within the same specific day, then it is called intraday trading. It directly means that if an investor buys a set of shares on a day, they must sell those shares by the end of the same day, before the market closes for the day. This form of trading lets the investors make use of margins, where they avail credit from a broker.

Intraday trading is low-risk since it is short term, but it can become risky when the trader uses too much margin money. Also, this trading requires comparatively less capital investment as it allows traders to make payments in the form of small margins.

Coming to the disadvantages, it does not facilitate long-term capital investments, thus the investors cannot expect high returns. It also demands the complete focus of the trader for the entire day.

Delivery trading

Delivery trading is the form of a long-term investment and it is also considered as one of the most secure ways of investing in the stock market. This form of trading is the most prevalent one in the stock market. The investor does delivery trading with a view to holding on to their purchased stocks for a longer period of time.

Unlike intraday trading, delivery trading does not allow the usage of margins and the investor themselves must be in possession of the required funds. This type of trading demands the investor to pay a complete amount for its transactions. Delivery trading does not put any time constraint on the trading of stocks, it would just require delivery of stocks to a respective demat account.

In delivery trading, there is a scope of earning high dividends, voting rights, etc., for the investor from the company they have invested in. There is no case of short selling under this type of trading. Delivery trading certainly yields great profits to the investor as the company growth reflects in the dividends the investor receives over a period of time.

In delivery trading, it is pertinent for the investor to make the complete payment since there are no margins allowed. This may lead to loss of investment opportunities in view of lack of access to money.

Swing trading

Swing trading capitalises on the changes or swings in prices of stocks or any other financial commodity in the market over a few days. Traders participating in swing trading aim to hold stocks for more than a day and benefit from the added momentum in the price of stocks.

In delivery trading, there is a scope of earning high dividends, voting rights, etc., for the investor from the company they have invested in. There is no case of short selling under this type of trading. Delivery trading certainly yields great profits to the investor as the company growth reflects in the dividends the investor receives over a period of time.

In delivery trading, it is pertinent for the investor to make the complete payment since there are no margins allowed. This may lead to loss of investment opportunities in view of lack of access to money.

Swing trading

Swing trading capitalises on the changes or swings in prices of stocks or any other financial commodity in the market over a few days. Traders participating in swing trading aim to hold stocks for more than a day and benefit from the added momentum in the price of stocks.

Apart from offering high returns, this trading form also does not require extensive monitoring of one’s trading profile and market conditions on a daily basis.

However, positional trading is one that requires heavy research and study before purchasing stocks of a company as the trading itself involves long term possession of those stocks.

Fundamental trading

Traders involved in fundamental trading are well-known for their fundamental analysis with respect to the company’s data and further growth estimations. There is a special focus on the events related to the company.

This type of trading is also called a borderline investment which is because fundamental traders do believe in a ‘buy and hold strategy, leading to long term trading i.e., investment.

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