shutterstock_47435548Traders follow different styles of trading equity in the market. They develop trading styles based on different factors, which may include a trader’s personality type, risk tolerance and even patience. All these factors and more can come together to help a trader develop and adopt a particular trading style. Here are the major trading styles that people may belong to.

Fundamental Trading

Traders who follow this trading style usually choose stocks or companies based on fundamental analysis. These traders look into important corporate events such as financial meetings and reports where they are able to know reports about current and expected earnings, corporate finances, acquisitions, losses and others. Analyzing these events and information helps traders develop an idea whether a company behind the stock share are on the way up or on the way down. Their trading decisions are based on what they fundamental analysis of corporations and how the business is run.

Technical Trading

This type of trading style involves the study of charts and graphs coming from the stocks or the market index to find patterns and opportunities for profitable trading. The charts and graphs may provide these traders with an idea whether market sentiment on a particular stock generally goes towards selling more than buying or vice versa. Understanding these patterns can provide traders with clues whether to move in or move out of trades.

Day Trading

This type of trading style involves holding positions in the market for short periods that do not last a day. Day traders usually do multiple trades within the day that can garner profits in small increments. These traders always buy low and sell high with multiple trades happening in just one day.

Swing Trading

This trading style may be closely related to fundamental trading, but on a shorter-term basis. While fundamental traders hold certain positions for months and even years, swing traders only hold positions for a period of days or weeks. Their belief is that certain price changes may take effect over a few days or weeks after a certain event triggers some market movement. Swing traders belong right in between day traders and fundamental traders.

Momentum Trading

This type of trading style involves traders watching out for stocks or securities that are on the way up and buy up shares to ride the wave and with the belief that the share prices may still be on the way up. These traders only look out for stocks that are on an upward momentum and try to get in on the ride to make decent profits once they sell.