Investing may relate to a wide range of activities and areas. Most people are familiar with investing when it is in in real estate or the stock market – at least they would have heard about it. People also invest in wine, art, old cars – or more recently in cryptocurrencies or NFTs. The only common element is the basic aim of the game, which is buy low, sell high – or in case of shorting, the other way around: sell high, buy low.
When it comes to the financial markets, investing is divided into different types according to the expected duration of the trades. Whether they last ultra-short (seconds) to short (minutes, hours) to medium (days, weeks), we would talk about ‘trading’ as opposed to long-term investing and ‘buy-and-hold’, which are more passive in their nature.
Various types of trading
Day trading, also known as intraday trading, is the collective term for trading strategies in which positions are opened and closed within the same day. There is a great variety of trading styles in day trading, from aggressive scalping on a tick chart, to trading on the 30-minute chart and holding trades for a couple of hours. Swing trading is the name for trades that have a longer life span, typically a few days to a week, while position trades will last even longer. In case of the latter, it is not unusual to use daily or even weekly charts.
Simply put, all we as traders are trying to do is to time our trades – if not to perfection, then at least so that we can make some profit along the way. In contrast to a pure buy-and-hold approach, we are able to profit both ways, as we may go long or short the market as we wish. On a side note, it is not uncommon to mix the two basic ways to approach the markets. For instance, pro-traders would often keep a fair chunk of their funds invested in single stocks, ETFs, or other investment funds, only to dedicate a share of their money to active trading.
Regardless of the style of trading you are interested in, some understanding of technical analysis would be advisable. Here at Ago-trade, we are particularly fond of the branch of TA known as price-action. However, we also like to keep an eye on macroeconomics and geopolitical events, as what we see in the charts is to a large degree a reflection of those underlying factors. Read more on how it is all interconnected here: [Hyperlink]
If you wish to study all aspects of trading more closely, I’d urge you to do our online course. Find it here: