#TradingTypes101 ### 📊 Trading Types 101: Your Ultimate Beginner’s Guide

Trading is about profiting from short-term price moves—unlike investing, which focuses on long-term growth. Here’s a detailed breakdown of key trading types, strategies, tools, and risks:

⏱️ 1. Time-Based Trading Styles

Scalping:

Goal: Profit from seconds/minutes of price fluctuations.

Trades: 10s-100s daily, targeting tiny gains per trade (e.g., $0.01-$0.05).

Tools: Level 2 quotes, real-time charts, algorithmic bots .

Risk: High stress, commission costs add up fast.

Day Trading:

Goal: Close all positions before market close; zero overnight risk.

Trades: Minutes to hours; relies on technical analysis or news (e.g., earnings reports) .

Rules: In the U.S., "pattern day traders" (4+ trades in 5 days) need $25k+ in margin accounts .

Swing Trading:

Goal: Capture multi-day/weeks trends (e.g., post-earnings rallies).

Tools: Candlestick patterns, moving averages; ideal for part-time traders .

Position Trading:

Goal: Hold weeks/months; blends trading with investing.

Focus: Macro trends (e.g., Fed rate changes) .

Table: Key Differences

| Style| Holding Period |Trades/Day| Risk Level |

|-----------------|---------------------|----------------|----------------|

| Scalping | Seconds-minutes | 50+ | ⚠️ |

| Day Trading | Minutes-hours | 5-20 | ⚠️ |

| Swing Trading | Days-weeks | <5 | ⚠️ |

| Position Trading| Weeks-months | <1 | ⚠️ |

⚡️ 2. Execution-Based Strategies

Algorithmic Trading:

Uses bots to execute 1000s of trades/day based on pre-set rules (e.g., arbitrage) .

Pros: Speed, emotion-free; Cons: Requires coding skills.

Arbitrage:

Exploits price gaps between exchanges (e.g., buying Bitcoin on Exchange A, selling on Exchange B) .

Market Making:

Profits from bid-ask spreads by placing simultaneous buy/sell orders .

Margin & Short Selling:

Margin: Borrow capital to amplify positions