Market Timing
What are Intraday, Swing and Positional Trading ?
- Intraday Trading: When you buy and sell stocks around the same day.
- Swing Trading: When you buy stocks but hold it for around 7-15 days.
- Positional Trading: This is long term investing, holding stocks for months or even years.
Example: Intraday is like 200m sprint, swing trading is like 400m run while positional trading is like marathon.
Aspect | Intraday Trading | Swing Trading | Positional Trading |
---|---|---|---|
Definition | Buying and Selling around the same day. | Holding Stocks for around 7-15 days. | Holding stocks for months are years. |
Timeframe | Hours, Minutes or even seconds of the same day. | Few days or 1-2 weeks. | Some months to years as well. |
Objective | Earning daily from small daily price movements. | Reducing the risk of daily market fluctuation and capturing real market movement | Investing on longterm gain on trusting the companies business and vision. |
Risk Level | High as intraday price movement depends on lots of factors. | Moderate as in removes intraday price movements noises. | Less as long term price movement depends on sector and business performance over the year. |
Technical Analysis | Relies highly on technical analysis specially daily charts. | Relies on weekly technical analysis and indicators. | Relies mostly on fundamental analysis. |
Capital Requirement | Low as it captures daily price movements. | Moderate as it is trying to capture price movements for more than a week. | Higher as in this funds will be hold for long period of time. |
Best For | Good knowledge in technical analysis and able to take high risks. | Beginners in stock market with some knowledge in technical analysis. | Good Fundamental analysis skills and have patience to put large funds over long period of time. |
Trading vs. Investing
Trading: Buying and Selling stocks in short span of time it includes both intraday trading and swing trading which is explained above.
Investing: Holding stocks for extended period of time which includes positional trading also explained above