Trading
Trading is the act of buying and selling financial assets such as stocks, bonds, and derivatives. It can be done by professional traders working with financial firms or by individual investors through online platforms. Trading occurs in stock markets, commodities, and derivatives exchanges.
Traders may be classified based on their activity type:
- Pattern Day Trader: Executes multiple trades in a short time (often within a day).
- Rogue Trader: An employee who trades without proper authorization, often taking high risks.
- Floor Trader: A member of an exchange who trades on the trading floor for personal gains.
Trading Strategy
A trading strategy is a planned method for investing based on set rules and objectives. Strategies are created considering factors like potential return, risk, and market behavior. Many modern traders use algorithms or software to automate their strategies and reduce emotional bias.
Types of Trading
Stocks Trading: Involves buying and selling shares of companies. Stock traders often benefit from price movements in the short term, ranging from a few seconds to a few weeks.
Futures Trading: Futures contracts are agreements to buy or sell an asset at a future date and fixed price. These may include commodities, indices, or foreign currencies, traded through exchanges.
Options Trading: Options give the right (not obligation) to buy or sell an asset at a preset price in the future. A "call" option allows buying; a "put" option allows selling.
Trading styles vary and may include day trading, swing trading, intraday, and long-term position trading�each with its own risk and time involvement.
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