Types of Trading in the Stock Market in India
Trading in the stock market means buying and selling shares to make a profit. People trade in different ways, depending on how much time they want to invest, how much risk they can take, and their financial goals. In this post, we will explain the types of trading in the share market in simple words to help you choose what suits you best in stock trading.
What Are the Main Types of Trading in the Share Market?
The stock market offers various types of trade, each with unique rules, timeframes, and strategies. Some focus on quick profits within a single day, while others involve holding stocks for a longer period. These methods suit different risk levels and investment goals. To get started, investors need to open a demat account. Below are nine main types of trading in the share market that investors commonly use, ranging from short-term opportunities to long-term wealth creation strategies:
1. Scalping – Micro Intraday Trading
Scalping is a high-frequency trading strategy where traders buy and sell stocks within minutes or even seconds to capture small, profitable price movements.
- Traders execute dozens or even hundreds of trades daily.
- Each trade aims for small profits from each trade
- Requires quick decision-making and advanced tools
- Best suited for experienced, high-speed traders
2. Swing Trading: Catch Medium-Term Moves
Swing trading involves holding stocks for a few days to weeks to profit from short- to medium-term price movements. It’s ideal for traders who can’t monitor the market all day but still want to benefit from market trends.
- Based on short- to medium-term trends
- Uses a mix of technical and fundamental analysis
- Less stressful and risky than intraday or scalping
- Favoured by part-time or casual traders
3. Position Trading: Holding for Weeks to Months
Position trading is a strategy where traders hold stocks for several weeks or even months, focusing on capturing long-term price trends rather than daily fluctuations. It combines elements of trading and investing, making it suitable for patient investors.
- Focuses on major market movements and long-term trends
- Requires minimal daily monitoring
- Often used for gradual wealth building
- Relies on fundamental and technical analysis
4. Momentum Trading: Riding the Trends
Momentum trading focuses on capitalising on strong price movements by following the stock’s direction. Traders buy in an upward trend or sell/short-sell during a downward trend, aiming to ride the wave for quick gains.
- Follows strong upward or downward trends
- Short- to medium-term trades
- Requires quick action and market timing
- High return potential but carries higher risk
5. Fundamental Trading: Long-Term Value-Based Approach
Fundamental trading focuses on choosing stocks based on a company’s true value, financial strength, and growth potential. Traders study profits, debt levels, management quality, and market news to identify undervalued opportunities for long-term gains.
- Based on company reports and financials
- Long-term holding (months or years)
- Less affected by daily price changes
- Similar to investing
For example, buying shares of a company with strong profits and low debt for future growth potential.
6. Technical Trading: Chart-Based Tactics
Technical trading relies on price charts and historical data to predict future stock movements. Traders use patterns and indicators to decide entry and exit points effectively.
- Based on price trends and trading volume
- Uses tools like Moving Averages, RSI, Bollinger Bands, and MACD
- Mostly for short-term trades
- Requires skill in reading charts
- Popular in intraday and swing trading
7. Delivery Trading: Share Ownership Approach
Delivery trading involves buying shares and holding them in your Demat account for as long as you want, without the obligation to sell the same day. It focuses on actual ownership and long-term wealth building.
- Long-term holding without a time limit
- No margin or leverage used
- Full ownership of shares
- Ideal for beginner traders
You can buy stocks online via Findoc and hold them securely in your Demat account.
8. Futures Trading & Options Trading: Leveraged Derivatives
Futures and options are derivative contracts where you don’t directly buy shares but agree to trade them at a future date for a fixed price. These trades allow leverage, meaning you can control larger positions with a smaller investment.
| Feature | Futures | Options |
|---|---|---|
| Meaning | Contract to buy/sell later | Right (but not duty) to trade |
| Cost | High due to full margin | Lower due to premium only |
| Risk | High risk | Controlled risk (for buyers) |
| Time frame | Short- to medium-term | Varies, usually short-term |
9. Algo & High-Frequency Trading: Automated Strategies
Algorithmic and high-frequency trading use advanced computer programs to execute trades automatically based on predefined rules. These strategies focus on speed and precision, often operating in milliseconds, and are primarily used by institutions rather than individual beginners.
- Requires specialised software and coding knowledge
- Executes trades in milliseconds for rapid market response
- Mostly used by large financial firms and professional traders
Comparing Types of Trading
Trading types vary in time horizon, risk, and expertise needed. Short-term methods, such as scalping and momentum trading, require speed and active monitoring, whereas delivery and fundamental trading are better suited for long-term investors. Below is the comparison between different types of trading in the stock market:
| Trading Type | Time Horizon | Risk | Cost | Skills Required |
|---|---|---|---|---|
| Scalping | Seconds–Minutes | Very High | High (frequent trades) | Advanced |
| Swing Trading | Days–Weeks | Moderate | Moderate | Intermediate |
| Delivery Trading | Flexible/Long-term | Low | Low | Beginner-friendly |
| Fundamental Trading | Months–Years | Low–Moderate | Low | Analytical & Research skills |
Frequently Asked Questions
Delivery trading and fundamental trading are best suited for beginners because they involve lower risk, focus on long-term growth, require minimal daily monitoring, and help new traders understand market basics without high pressure.
To trade stocks, open a Demat and trading account, research companies, choose a trading style, place buy or sell orders via your broker’s platform, and monitor market movements regularly.
Yes, many traders use more than one strategy. For example, someone may do delivery trading for long-term goals and intraday trading for daily profits. But it’s best to start with one strategy and learn it well before trying others.
There are two main types of stock markets. The primary market is where companies issue new shares to raise capital, while the secondary market is where investors trade existing shares through exchanges.