What are the Types of Stock Market Trading in India?

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What are the Types of Stock Market Trading in India?

Stock market is a vast subject. Moreover, there are various types of trading styles to choose from. You can choose the trading style that suits you the most. It majorly depends on the financial goals that you want to achieve.

Like for example, if you wish to create wealth, you can opt for long term investments. Likewise, if you wish to make quick money, then opt for short term trading. Similarly, if you don’t want to carry forward the delivery, you can opt for intraday trading.

Every trading style has its own advantages and disadvantages. Therefore, before you choose a type of trading style, you must know in depth about it. After all, you are investing your hard earned money in the stock market . It is important to educate yourself to choose the correct trading style that suits your needs.

Here we share with you different types of stock market trading that takes place in India.

Types of Trading in Stock Market

  1. Intraday Trading [ Types of Trading for Experienced Players]

Intraday trading is also known as day trading. In this type of trading, the trader buys and sells the stocks on the same day. He can enter into a stock any number of times within a single day. Here, the trader can hold a stock for a few seconds or few hours or till the end of trading session. In other words, he has to close his trade before the closing hours of market.

Intraday trading is for active traders. It allows them to earn quick money. However, it is equally risky. It requires fast decision making and quick actions. Therefore, beginners should stay away from intraday trading style.

  1. Delivery Trading [ Types of Trading for Beginners]

Delivery trading is also known as position trading. In this type of trading, the trader keeps a long tern horizon. Meaning, the trader buys and holds the stocks for longer period of time. It can be for weeks or even months. The biggest challenge in delivery trading is to identify stocks with large price movement. Here, the trader seeks to buy stocks based on extensive research. Moreover, he looks at technical trends and projections that suggest a possibility of large price movement. In this trading style, the trader buys a stock when he sees an emerging trend. Likewise, he sells a stock when the trend is at its peak.

  1. Short Sell [ Types of Trading for Experienced Players]

Short selling is another popular trading strategy. Here, the trader sells the shares even without holding them. In other words, he sells first and then later buys the shares before the end of the trading session. The logic behind this trading style is that the trader anticipates the market to be bearish. He expects the price to fall. So, he enters a short position (sells shares) and later recovers the same (buys shares) when the price falls down. The position has to be squared off before the market closes. In other words, it means selling shares at the high price and buying it back at a low price. 

  1. Buy Today Sell Tomorrow (BTST)

As the name suggests, in this type of trading, you buy today and sell tomorrow. Which means people buy shares today in anticipation that price will go up the next day. The next day when the market opens, the trader sells his shares and makes a profit. In BTST, you do not get the delivery of shares. This is because stock market in India works on T+2 settlement cycle.

There is a difference between delivery trading and BTST. In delivery trading, you get the delivery of stocks to your demat account. Once you get the delivery, only then you can sell the stocks. But what if there is a big opportunity that exists before you get the delivery? Then the role of BTST comes into the picture. In BTST trading style, you can buy shares and sell them tomorrow even without having a delivery. An advantage of BTST is that you don’t have to pay any DP charges.

  1. Sell Today Buy Tomorrow (STBT)

This trading style is exactly opposite of BTST. Here you can sell today and buy tomorrow. But this type of trading is not allowed in equity trading. However, it can be done in the derivatives market. In this style, the trader enters into a short sell first (sells). He then carries forward his short sell position to the next day and squares it off by buying. In other words, the trader here expects the market to be bearish. Therefore, he taps the opportunity and earns a profit. In simple words, in STBT, a trader sells some asset class future and again buys it as the market opens on the next day.

  1. Margin Trading

Margin trading involves buying and selling securities in a single session. It is good for traders who believe in making quick money. Margin trading is very useful for Futures and Options trading. Here you have to buy a minimum lot of assets in one go. A trader needs to pay the initial margin to trade in this style. The margin is a certain percentage of the total traded value. It is pre-determined by SEBI (stock market regulator).

There are the popular types of trading that happens in Indian stock market. You can follow the style that suits you the most. But before selecting any type of trading style, analyse your financial expectations. Some trading styles are good for quick money while some are good for creating wealth.

Learn Different Types of Trading

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