Most people only know stock trading and forex trading. There’s more, there are different types of online trading and investors have a wide range of different types of online trading to choose from. Some investors prefer day trading, while some prefer short-term or long-term trading options. There are three categories of online trading options and they are:
- Short-term trading – this type of trading starts from two days to a week
- Medium-term trading – is between weeks and a few months
- Long-term trading – this involves trading securities and it can last for years
Each category comes with benefits and terms and conditions. Whatever the type you choose, make sure that your trading style suits your lifestyle. You cannot choose a short-term (day trading) and expect to be a successful trader when you have a 9-5 job. Also having an online trading style that suits your trading strategy is a key to becoming a successful trader.
With the rise of technology, online traders have an option to choose from a wide selection of trading strategies and online trading products. Online trading products we’re referring to swing trading, CFDs, forex, stock, day trading and many more.
Common types of online trading in South Africa
Below are the most common types of online trading that most online trading brokers offer their traders and investors.
Day trading is speculation in securities, specifically buying and selling financial instruments within the same trading day. This type of online trading is the most common among the traders. People who want to make money in a short space of time tend to opt for this one. They buy and sell stock based on their speculations.
Different types of day trading strategies include some of the following things:
- Price Action Trading
- News Trading
- Rebate Trading
- Market Making
- Pattern Trading
- Momentum Day Trading
Position Trading is the longest-term online trading type and can last for a few months to a couple of years. With position trading, you need to do an intensive research before buying and selling securities. Identify trends and take advantage of them. You can make lots of money with position trading. Traders buy the stock at the beginning of the trend and sell it at the end of the trend or when the trend reached the height.
Online CFD Trading
With CFD (Contract for Difference) Trading, you are able to speculate on the falling or rising prices of fast-moving global financial markets. You can trade instruments such as treasuries, indices shares and commodities. This popular form of derivative trading is popular among the online traders and investors. Once you start understanding CFD trading, you will be able to make millions if you stick to your online trading strategy.
Scalping trading is an online trading style that takes advantage of profits when there are gaps in the trend. You can make lots of money with scalping trading. In order to successfully trade in this, you must have a good exiting strategy; know when to exit the position. You can lose a lot of money if you don’t know what you are doing.
Swing Trading is a short-term trading type that is used to trade options and stocks. Swing trading usually lasts two to six days but it can also last until two weeks. Traders who trade under this type of online trading utilise technical analysis to keep an eye on stocks with temporary price momentum.