Types of trading
There are different ways of trading, associated with the investment time horizon.
It is common for all of them that in the operation they charge us low commissions and the spreads (difference between the purchase price and the sale price) are small, having a greater importance in short-term operations. When the spreads are wide, and we attack a position (the price they sell us at), if we want to undo it we will have to sell at the price they buy from us, losing large amounts of money.
Types of trading
These are the most important types of trading according to the investment horizon:
- Scalping: it is very similar to day trading but in this case they operate with very short-term charts, between charts by tics and 1 minute. It is a much more aggressive type of operation, with high levels of leverage to be able to benefit as much as possible from small market movements.
- Day trading (intra-day trading): investors who practice this type of trading are those who do not keep their positions open at the end of the day. That is why they operate with short-term charts, between 5 and 10 minutes. In this type of trading, the risk assumed in each position opened by the trader is highly controlled, who must anticipate the market by observing the macroeconomic agenda of each day.
- Short-term trading: in this type of trading, the positions are left open at the end of the day, since the time horizon is usually approximately 10 days. It is usually used with daily charts to identify the trend, and once the market has started in favor of the trend, we increase our position by buying more securities.
- Long-term trading: in this case, the time horizon is not defined and therefore daily and weekly charts are used. In this case, it is also common to increase the positions in a pyramidal shape. Unlike short-term trading, investments not only look for a difference in price in our favor, but also for the dividend they distribute if we are investing in stocks.
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