#TradingTypes101

Based on holding period and frequency, there are various trading styles:

* Scalping : aiming to profit from tiny price movements, often holding positions for seconds or minutes. Scalpers execute numerous trades a day.

* Day Trading (or Intraday Trading): Traders open and close all their positions within the same trading day. They aim to capitalize on short-term price fluctuations.

* Swing Trading: This style involves holding positions for a few days to a few weeks, aiming to capture "swings" or short-to-medium term price movements within a trend.

* Position Trading: This is a long-term strategy where traders hold positions for weeks, months, or even years. Traders focus on major market trends and fundamental analysis rather than daily price fluctuations.

There are different ways to participate in price movements, and can break down to:

💸 Spot Trading : Exchange of assets with its current market price. When you buy and sell in the spot market, you're directly acquiring or selling underlying assets.

No leverage involved, so low risk.

💸 Margin Trading : Margin Trading involves borrowing funds, so you can open positions larger than your capital would permit. You have to put up a portion of the trade's value as collateral and makes leverage from it.

It magnifies both potential gains and losses, and it is possible to loss more than your initial investment (or available deposit), which can lead to liquidation. Traders typically have to pay interest on the borrowed funds.

Leverage creates risk.

💸 Futures : Futures contracts standardized agreements to buy or sell a specific quantity of asset at a predetermined price on a future date. They are called derivative because their values are derived from an underlying asset. Future contracts are used by producers to hedge against risk and by speculators to profit from future price movements .

💸 Options : Options contracts are derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specific date.