Active trading in the stock market India refers to trading that occurs at regular intervals with the goal of profiting from market movements on a consistent basis. Active traders are usually those who understand that in order to profit from the markets, they must work hard. With the shift in public perception, stock market trading is no longer regarded as a gamble, but rather as a profession requiring research, study, constant attention, and patience. With technological advancements, stock market trading has become much easier, with the help of necessary tools and trading platforms that allow traders to place trades themselves without the need for a broker.
As a result, if you want to start trading in the stock markets as an active trader, now is the best time to do so, because the markets provide traders with opportunities to earn money every day, week, and month. If you’ve decided to start trading, first open demat accountand further you can begin learning about trading strategies and working your way up to implementing them
Intraday trading: Intraday trading is the buying and selling of financial instruments such as stocks, shares, currencies, commodities, and so on on a daily basis without taking ownership of the securities overnight. Both the buying and selling of a specific financial instrument take place during the trading hours of a specific market or exchange.
In the case of Indian stock exchanges, intraday trading orders are placed between 9:30 a.m. and 3:30 p.m. When it comes to intraday trading, it is critical to remember that you should never follow a tip that has not been thoroughly researched. Before betting your money on a trade, it is critical to trust well-researched trading advice provided by certified investment advisors. One must understand the timing of market entry, the placement of a target and a stop loss, the use of the appropriate type of order, and so on. You should also choose the right stock for your investments and avoid trading in stocks with little liquidity.
Swing trading: For active traders, swing trading entails holding shares, stocks, or other financial instruments for a period ranging from a few days to a few weeks. In this type of active trading, money is invested in the markets for a longer period of time than inintraday tradingbut for a shorter period of time than in medium or long term investing.
Swing trading requires the entire amount of purchased securities be deposited in advance. When a market begins to trend, the swing trading strategy comes into play. If the markets are consolidating or range bound, swing trading strategies are ineffective because the markets are not moving.
News Strategy Trading: This trading strategy is similar to swing trading. However, the approaches of these two are very different. Traders who trade on the news frequently bet on the impact of a specific event’s outcome on the markets and place their trades before the event occurs.
For example, if a positional trader believes that the upcoming union budget will significantly benefit the country’s energy sector, he will buy stocks in this sector in advance, slightly ahead of the actual day of the budget, so that when the budget is announced, he can profit from the effect of the announcement. If his prediction about positive news for the Energy sectors is correct, he will profit and sell his stock once it appreciates as a result of the news; however, if his prediction is incorrect, he will have to exit his position as soon as possible.
Scalping Strategy: The holding period is the shortest in this type ofprofitable trading strategy because traders use the difference between the ask and bid prices to make small profits across multiple trades. Scalping does not involve large price movements, but rather seeks to profit from minor market fluctuations as prices jump from one to the next.
Scalping, as opposed to swing trading, works well in markets where there is little trend or sudden movement, allowing these small movements to remain small and be used to take small scale profits. In scalping, multiple trades are placed in a single day, which is more than the number of trades placed in intraday trades. Scalping is now done using robots and machines that can reduce holding time from minutes to a few seconds or milliseconds, which is known as high frequency trading or ultra high frequency trading.
Each trading strategy serves a unique purpose and employs various types of analysis and research. For example, technical analysis is most useful in intraday trading, whereas fundamental analysis is more useful for trading on news strategy. Swing trading would benefit from a combination of fundamental and technical analysis, whereas scalping would benefit from quantitative analysis tools.
It is essential that you understand everything about the trading strategy you choose as a trader. Also, irrespective of the trading strategy, one thing that all traders should be careful about is the brokerage fee. We at Tradeplus are one of the pioneers in providing a flat fee brokerage plan. This plan is best suited for active traders as they don’t have to pay a brokerage fee for every transaction, instead can pay a flat brokerage fee and carry out unlimited transactions across any sections for that month.