35 Types of Trading in The Stock Market – Complete Guide with Examples

Trading is the practice of buying and selling of financial instruments in order to make profit from their short-term price movement. Trading these financial instruments involves stocks, commodities, currencies, derivatives, and digital assets. Unlike long-term investing, trading focuses on capturing a short-term price movement by actively analyzing price behavior, volume, trends, and market sentiment. 

The origin of trading dates back thousands of years to the barter system and early commodity exchange in civilizations such as Mesopotamia and Ancient Rome. Over the time, trading evolved from physical market place to well organised stock exchanges in the 17th century, and eventually into today’s digital, high-speed global markets where transactions occur in milliseconds.

How Many Types of Trading are There?

There are mainly 35 types of trading based on holding period, instruments, strategy and analysis. These 35 types of trading are mentioned briefly below in the table. 

Type of Trading	What Is It + Best Timeframe	Suitable For	Risk Potential
Based on Holding Period
Day Trading	Buying & selling within the same day; intraday charts (1–15 min)	Active traders with time	High
Swing Trading	Holding trades for days to weeks; 1H–Daily charts	Working professionals	Medium
Position Trading	Long-term trend-based trading; Weekly–Monthly charts	Long-term investors	Low–Medium
Scalping	Ultra-fast trades in seconds/minutes; 1–5 sec / 1-min charts	Highly skilled traders	Very High
Based on Strategy & Analysis Type
Momentum Trading	Trading strong price moves; 5-min–1H charts	Trend-following traders	High
Trend Trading	Riding long/short-term trends; 1H–Daily	All levels	Medium
Breakout Trading	Trading break of key levels; 5-min–1H	Technical traders	Medium–High
Range Trading	Buying support, selling resistance; 15-min–4H	Sideways market traders	Medium
Reversal Trading	Trading trend reversals; 15-min–4H	Experienced traders	High
Algorithmic Trading	Automated rule-based trading; all timeframes	Coders & quants	High
Arbitrage Trading	Exploiting price differences; milliseconds	Institutions	Low
Options Trading	Trading calls & puts; varies	Advanced traders	High
Fundamental Trading	Based on economic/company data; Daily–Monthly	Long-term thinkers	Low–Medium
Technical Trading	Indicator & chart-based trading; all timeframes	All traders	Medium
Quantitative Trading	Math/model-driven strategies; all timeframes	Quants & analysts	High
News-Based Trading	Trading event-driven volatility; 1–5 min	Fast decision makers	Very High
Social Trading	Community-based sentiment trading; all timeframes	Beginners	Medium
Copy Trading	Replicating expert trades; all timeframes	Beginners with capital	Medium
Price Action Trading	Pure chart reading; no indicators; 5-min–Daily	PA-focused traders	Medium
Chart Pattern Trading	Pattern-based setups (M/W, H&S); 15-min–Daily	Visual traders	Medium
Contrarian Trading	Trading against market sentiment; Daily	Experienced investors	High
Value Investing	Buying undervalued assets; Monthly–Yearly	Long-term investors	Low
Dividend Trading	Trading for dividend income; Monthly–Yearly	Passive investors	Low
Insider Trading	Trading on non-public information; any timeframe	Illegal activity	Extremely High
Smart Money Trading	Following institutional footprints (SMC/ICT); 5-min–1H	Skilled PA traders	High
Seasonality Trading	Trading recurring market cycles; Weekly–Monthly	Swing/position traders	Medium
Sector Rotation Trading	Shifting sectors based on macro trends; Monthly	Portfolio managers	Medium
Based on Instrument Type
Stock Trading	Trading company shares; all timeframes	All investors	Medium
Forex Trading	Currency trading; 1-min–Daily	High-liquidity traders	High
Crypto Trading	Trading digital assets; 1-min–Daily	High-risk traders	Very High
Commodity Trading	Trading oil, gold, agri; 5-min–Daily	Hedgers & traders	High
Futures Trading	Leveraged contracts; 1-min–Daily	Advanced traders	Very High
ETF Trading	Trading exchange-traded funds; Daily–Monthly	Beginners & investors	Low–Medium
Bond Trading	Trading government/corporate bonds; Monthly	Conservative investors	Low
Metal Trading	Trading gold, silver, platinum; 5-min–Daily	Commodity traders	Medium–High

1. Day Trading

Day trading, also known as intraday, is the style of trading which involves the buying and selling of financial instruments within a same trading day with no positions carried overnight. The goal of day trading is to make profit from the short-term price movement driven by intraday volatility, liquidity, and momentum rather than long-term fundamentals. The timeframe used in day trading includes 3min, 5min and 15 min. 

In the above chart, Reliance Industries formed a Bearish Pennant pattern on the 5 min chart on 13th Jan 2026, broke the pattern to the downside on the same day confirming the pattern.  This breakdown provided a clean intraday short setup giving us a trade of 1:2 risk to reward within the same session. 

Pros vs Cons of Day Trading

Pros	Cons
No overnight risk	High stress and screen time
Frequent opportunities	High transaction costs
Fast capital turnover	Requires strict discipline
Clear intraday risk control	Small mistakes are costly
Works well in volatile markets	Most beginners lose money

According to tradeciety, only 4-10% of day traders profit consistently after fees, per broker data, whereas 80-90% day traders fail to make consistent profits. 

2. Swing Trading

Swing trading is the style of trading where traders hold their position for several days to week in order to profit from price swing in a broader trend. Unlike day trading, swing trading does not require constant screening time. The timeframe used in swing trading involves daily and 4-hour timeframes. 

In the above chart we can see BSE Ltd has given a breakout of flag pattern in an uptrend on the daily chart. The trade lasted for almost 4 weeks giving us profit of 1:2 RR.

Pros	Cons
Less screen time than day trading	Overnight and gap risk
Better risk–reward potential	Slower feedback
Works well in trending markets	Requires patience
Lower transaction costs	Market-wide news impact
Suitable for working professionals	Drawdowns can last days

TraderLion reports experienced swing traders achieve 10-30% annual returns with disciplined strategies, while 90% of active traders lose overall. 

3. Positional Trading

Positional trading is the long term trading style where traders hold their position for a long period of time ranging from several weeks to months or years benefiting from major trend moves. Positional trading focuses on a higher time frame and broader market structure along with fundamentals and macroeconomics. 

The above chart shows corrections in National Aluminium stock by 46% from ATH. This opened the opportunity for positional traders to buy the shares at 46% discount. Stock took support from the Fibonacci golden zone where positional traders could have bought after a change of character on a lower time frame. This trade is still running since the last 7 months giving more than 100% return. 

Pros vs Cons of Position Trading

Pros	Cons
Minimal screen time	Capital locked for long periods
Less affected by intraday noise	Slow feedback
High reward potential	Requires patience
Lower transaction costs	Larger drawdowns possible
Suited for strong trends	Not ideal for sideways markets

Around 20-40% of the traders maintain long-term profits in positional trading, which is far better than day trading where the profitables are 1-10%. Quantified strategies backtested results on S&P 500 shows the win rate of 60-70% if the holding exceeds one year. 

4. Scalping

Scalping is a very short term trading strategy where traders aim to make profit from very short term price movement with seconds or minutes. The timeframe used in scalping is usually 1-minutes to 5-minutes. This style of trading focuses on speed, liquidity, momentum, and precision rather than large price targets. 

The above chart shows the breakout of the ascending triangle pattern on a 1 min timeframe. A scalper could have entered the trade on a breakout  with a profit target of 1:2 or 1:3. In this case, we achieved 1:3 RR within 20 min.

Pros vs Cons of Scalping

Pros	Cons
No overnight risk	Extremely stressful
Many trading opportunities	High brokerage & slippage
Quick results	Requires fast execution
Small stop-loss size	Very low margin for error
Works in liquid markets	Not beginner-friendly

Regulatory data from ESMA, ASIC, and broker reports (e.g., 2020–2025) consistently suggest that around 80–95% of retail day traders and short-term participants lose money quarterly, leaving only a small fraction (roughly 1–10%) profitable long-term—an important reality check for anyone exploring Scalping Trading.

5. Momentum Trading

Momentum trading is the strategy where trades utilise the strength and the speed of an asset in a particular direction. Traders buy assets when it shows a strong upward price momentum or sell assets when it shows a strong downward momentum, with the expectation of continuation of existing trend. The timeframe in this strategy depends on the style of trading. 

Image above shows the drop in the stock HCL Technologies LTD after reaching its strong resistance level of  1740-1750, with a strong downside momentum. The stock dropped more than 12% within the span of 18 days. 

Pros vs Cons of Momentum Trading

Pros	Cons
Trades align with trend strength	Sharp reversals can cause losses
Clear entry and exit logic	Late entries reduce risk–reward
Works well in trending markets	False breakouts in choppy markets
Scalable across timeframes	Requires fast decision-making
Strong risk–reward potential	Momentum fades quickly

According to Quantinsti, around 60-70% of the momentum trading strategy underperforms benchmark S&P 500 over a long period due to trend reversals. But the skills trader can achieve 10-20% of annualized return with strict risk management. 

6. Trend Trading

Trend trading is a trading style where traders identify the established market trend, such as bullish, bearish or sideways and trade in the same direction of the market aiming to capture the portion of the trend. Trend trading can be done across all the time frames depending on the trader’s style. 

The above chart shows the M&M stock is in uptrend making higher highs/ higher lows and trading above 200 EMA. A trend trader can trade such stocks by buying it on pullback and selling it until the trend reverses. 

Pros vs Cons of Trend Trading

Pros	Cons
Captures large price moves	Late entries reduce reward
Fewer trades, lower costs	Sideways markets cause losses
Works across asset classes	Requires patience
Simple rules-based approach	Trends don’t last forever
Strong risk–reward potential	Drawdowns during pullbacks

Trend following strategies deliver 8-15% annualized returns in backtests across commodities and equities, with top systems like Turtle Traders achieving 20-80% CAGR historically, though 70-80% of retail trend traders underperform benchmarks due to drawdowns exceeding 30%

7. Breakout Trading

Breakout trading is a type of trading where a trader enters a trade when price breaks above resistance or below support level, signalling the start of a new trend or strong momentum. The core idea of breakout trading is that once price escapes a consolidation, it often moves quickly in the breakout direction due to fresh participation and stoploss.

Above is the stock chart of Shriram Finance, which was facing resistance near the level of 700 to 730. On 29 October 2025, stock closed above the level of this zone, giving breakout of the resistance. A breakout trader would have entered a long position after a breakout with RR of 1:2 or 1:3. 

Pros vs Cons of Breakout Trading

Pros	Cons
Captures strong momentum moves	False breakouts are common
Clear entry and stop levels	Requires patience before entry
High risk–reward potential	Late entries reduce reward
Works well in volatile markets	Choppy markets cause losses
Simple rule-based logic	Needs volume confirmation

Trading Rush analysis (100 breakouts tested) showed that raw breakouts delivered roughly a 36% win rate, while filtered setups with pullback and volume confirmation improved results to 50–58%, with 40–50% turning out to be false moves—making 1:2 risk-reward ratios more viable in strong trends. This highlights why structured rules are essential in Breakout Trading.

8. Range Trading

Range trading is the type of trading where traders buy the asset at support and sell at resistance within a horizontal price range in a sideways market. In a ranging market, price keeps oscillating between support and resistance level where traders focus on repeated price swings rather than trend continuation. 

As we can clearly see in the above chart, Hindustan Unilever stock price was consolidating between the price range of 2383 and 2708. By identifying these levels as support and resistance zones, traders can go long when price comes to support and short when price reaches its resistance. 

Pros vs Cons of Range Trading

Pros	Cons
Works in sideways markets	Fails during breakouts
Clear entry and exit zones	False signals in low-volume markets
Lower risk with tight stops	Limited profit per trade
Predictable strategy for beginners	Requires patience
Can combine with oscillators	Less effective in strong trends

According to quantified strategies, range trading shows a high win rate of 65-80% considering the proper risk management. 

9. Reversal Trading

Reversal trading is the strategy where traders enter a trade expecting an ongoing trend to reverse. Traders typically buy at the end of downtrend, expecting trend change from bearish to bullish and visa versa. Unlike trend-following or breakout strategies, reversal trading profits from shifts in market sentiment and is used near key support or resistance levels. 

As we can see in the chart above, L&T Finance reversed its trend from downtrend to uptrend after making double bottom. A trend reversal trader can capitalize on such trade with favorable risk to reward. 

Pros vs Cons of Reversal Trading

Pros	Cons
Potential for large profits	High risk if trend continues
Works well at key levels	Requires precise timing
Can be combined with oscillators	False signals are common
Profitable in trending exhaustion	Difficult for beginners
Offers attractive risk–reward	Needs strong confirmation

According to ACY Securities’ AI-driven backtest report, reversal trades showed the lowest win rate at 41.2% across 32 trades with a net loss of -$870.90, underperforming trend-following setups.

10. Algorithmic Trading

Algorithmic trading (Algo Trading) is a method where trades are executed by the computers using predefined rules and programming languages. Algo trading helps remove human emotion, and gives precise, fast execution based on technical signals, and statistical models. Algo trading can be operated across all the timeframes, from millisecond (HFT) to daily or weekly strategies. 

The above image is the dashboard of Tradlgo, showing the backtest result of an algo strategy called Gamma Rider which displays key metrics like total profit (₹38,267), average daily profit, win vs. loss days, risk-to-reward ratio, and maximum drawdown. This means that predefined rules in this algo strategy are profitable and ready to deploy. 

Pros vs Cons of Algorithmic Trading

Pros	Cons
Eliminates emotional mistakes	Requires coding or software knowledge
Fast and precise execution	System failures or bugs can be costly
Can trade multiple instruments simultaneously	High setup and maintenance cost
Backtesting improves strategy reliability	Over-optimization risks
Operates 24/7 in automated markets	Needs continuous monitoring

Algo trading market size reached ~USD 20B in 2026 per Mordor Intelligence, up from $17B in 2023, with 8-16% CAGR projected through 2035 driven by India’s 55% NSE algo share.

11. Arbitrage Trading

Arbitrage is the strategy where traders trade the price difference of the same asset across different markets or exchanges. Unlike directional trading, arbitrage does not require market trends, support and resistance. In arbitrage profits come from simultaneous buying low and selling high to exploit inefficiencies. Arbitrage can occur across stocks, forex, commodities, cryptos, or derivatives, and is often executed on very short timeframes.

As we can see in the above image, the price of TATAPOWER differs by 0.05 on two different exchanges. Arbitrage traders identify such price differences to make profits. This trading is not meant for retailers and mainly done by institutions using systems.

Pros vs Cons of Arbitrage Trading

Pros	Cons
Low-risk if executed correctly	Requires ultra-fast execution
Profits independent of market direction	High competition from HFT firms
Exploits market inefficiencies	Small profit margins per trade
Can operate across multiple markets	Needs sophisticated technology
Works in highly liquid assets	Transaction costs can erase profits

According to EnrichMoney analysis, Arbitrage Trading achieves a 70–90% success rate through mean-reversion models, with an average win return of around 0.1–0.5% per trade.

12. Options Trading

Option trading is the trading of the derivatives of the underlying asset that gives the right but not the obligation to buy or sell an underlying asset at a predetermined price within a specific period of time. Unlike stocks, option trading allows traders to leverage their positions and hedge risk. Option trading can be done across all the ime frame from 1 min to 1 week or month. 

After breaking a resistance level, the Shriram Finance rose more than 30% within 60 days. An option trader could have bought an ATM call option of strike 700 or could have sold put option of same strike. 

Pros vs Cons of Options Trading

Pros	Cons
Leverage allows high returns	High risk of total loss
Hedging opportunities	Complex strategies require skill
Flexible strategies for any market	Time decay reduces value
Can profit in up, down, or sideways markets	Requires constant monitoring for intraday trades
Defined risk strategies (spreads)	Volatility can drastically affect pricing

According to Dhan, nearly 90% of NSE F&O volume is dominated by options activity. However, in option trading, OTM buyers reportedly face 80–90% loss rates, as reflected in SEBI broker data—highlighting the importance of strategy selection and risk management.

13. Fundamental Trading

Fundamental trading strategy involves the use of fundamental factors to make buy and sell decisions rather than short-term price action. The fundamental factors include economic, financial, and company-specific data, intrinsic value, market cycles, earnings reports, and macroeconomic indicators to identify assets that are undervalued or overvalued. Fundamental trading is done for longer duration such as swing and positional. 

The above image is showing the fundamental data of Reliance Industries which is essential for fundamental trading. Fundamental traders analyse this data to find undervalued and overvalued companies for trading and investing . 

Pros vs Cons of Fundamental Trading

Pros	Cons
Focus on long-term value, less noise	Slow feedback; requires patience
Can avoid market overreactions	Not suitable for fast intraday profits
Lower transaction costs	Requires in-depth research
Reduces emotional trading	Market can remain irrational longer than expected
Works well for positional or investment strategies	Misses short-term momentum opportunities

Fundamental trading on the NSE focuses on simple metrics like P/E ratios (Nifty 50 averages 24–25x), EPS growth above 15%, ROE over 20%, and low debt-equity below 0.5.

14. Technical Trading

Technical trading is a strategy where a trader makes decisions of buying and selling based on price action, chart patterns, and technical indicators rather than fundamental data. Unlike fundamental trading, which focuses on intrinsic value, technical trading focuses on historic price and volume behaviour. It can be applied across all the timeframe, from scalping to swing and positional. 

The above chart shows the trade taken in stock BSE,  completely based on technicals using price action, chart pattern and indicator. The price made a flag pattern above 200 EMA, indicating a pause in an uptrend. The break of this pattern supported by MACD gave us a good trade of 1:2 RR. 

Pros vs Cons of Technical Trading

Pros	Cons
Works across all markets	Can produce false signals
Can be applied to any timeframe	Requires discipline and practice
Quick feedback on trades	Indicators can lag or conflict
Suitable for intraday to long-term strategies	Relies heavily on historical data
Objective rules for entries and exits	Market fundamentals ignored

The winrate and profitability entirely depends on the style of trading. Day trading/scalping with 40–60% wins, needs high risk-reward. Swing/positional with 50–70% wins with fewer trades. Algo/arbitrage with 70–95% wins, but retail edges are limited.

15. Quantitative Trading

Quantitative trading is the trading strategy where buying and selling of an asset is done based on the mathematical models, statistical analysis, and predefined algorithms, using computers. Quantitative trading operates across all the timeframes simultaneously, where holding periods can range from milliseconds to days or weeks. 

Pros vs Cons of Quantitative Trading

Pros	Cons
Emotion-free execution	High setup complexity
Scalable across markets	Requires programming & data skills
Backtested before deployment	Models can break in new regimes
Handles large data efficiently	Infrastructure and data costs
Consistent rule-based execution	Overfitting risk if poorly designed

As per QuantInst backtest report from 2010-2025, a quant fund generates an average of 12-18% CAGR with a Sharpe ratio of 1.2-1.8.

16. News-Based Trading

The News-Based trading involves taking position based on market moving news such as economic data releases, earnings announcements, central bank decisions, geopolitical events, or breaking headlines. News-based trading focuses on speed, reaction and expectation vs outcome, not historical price patterns. These trades are usually short lived with holding periods of few minutes, few hours to few days. 

The above- mentioned chart is a chart of stock ITC which was at its key level before the fall. This sharp fall was influenced by government decisions to raise excise duty. Stock broke its key support level after news and fell more than 25%, where traders could have plans for a short trade. 

Pros vs Cons of News-Based Trading

Pros	Cons
Captures fast, large price moves	Extremely high volatility
Short holding period	Slippage and spread widening
Works across stocks, forex, indices	Requires fast execution
Clear event-based catalyst	False moves and whipsaws
Less reliance on indicators	High emotional pressure

According to Xuejun Jin, Cheng Chen, Xiaolan Yang (2024). The effect of international media news on the global stock market. Positive international news sentiment was statistically linked to higher stock market returns across 35 countries from 2006–2020.

17. Social Trading

Social trading is a type of trading where a trader takes a trade by observing, following or copying the trade of other traders through online platforms and communities. Instead of developing their own strategies, traders depend on collective intelligence, shared trade ideas, or automated copy-trading systems. 

The image above shows the TradingView Community section, where traders publicly share their market analysis and chart ideas. Users can view, learn from, or follow their favorite contributors. You can also post your analysis as a contributor, a TradingView premium membership is required.

Pros vs Cons of Social Trading

Pros	Cons
Beginner-friendly approach	Overdependence on others
Access to experienced traders	Past performance may not continue
Time-saving	Limited control over trade logic
Transparent performance metrics	Risk of blindly copying
Learning through observation	Strategy style may not suit you

With more people looking to invest on their own, social trading platforms with options like copy trading and peer-to-peer views are becoming popular. The global social trading platform market is projected to grow at a CAGR of 9% between 2025 and 2034.

18. Copy Trading

Copy trading is the type of trading where traders or investors automatically copy or replicate the trade of another trader in real time. Unlike social trading, which focuses on idea sharing, copy trading focuses on execution. The timeframe of trading entirely depends on the strategy of the trader being copied which can range from scalping to swing or positional. 

Above is the screen shot from Bybit platform, which shows the list of top traders based on ROI. An individual can copy the trade of preferred traders just by clicking the copy button. 

Pros vs Cons of Copy Trading

Pros	Cons
Fully automated execution	Loss of strategic control
Beginner-friendly	Dependence on trader’s discipline
Saves time and effort	Strategy may stop working
Access to professional traders	Risk of large drawdowns
Transparent performance data	Slippage and execution differences

A study by the Massachusetts Institute of Technology analyzing social trading behavior found copy trading improved average investor returns by ~6–10% compared to self-directed retail trading.

19. Price Action Trading

Price action trading is the type of trading where decisions are made entirely based on price movement, without relying heavily on indicators. In price action trading traders read candlesticks, market structure, support-resistence, and momentum to understand buyers-seller behaviour. It is used across all timeframes, from 1–5 minute charts for intraday trading to daily and weekly charts for swing and positional trades.

The above price structure of Ashok Leyland is clearly showing that the stock is in uptrend marking higher highs and higher lows. A price made hammer candle pattern after a pullback in an uptrend. A trader could have entered after hammer to trend continuation trade. This is how an opportunity can be identified just by using price action. 

Pros vs Cons of Price Action Trading

Pros	Cons
Clean, indicator-free charts	Requires experience and screen time
Works in all markets	Subjective if rules aren’t defined
Adapts to any timeframe	No fixed signals
Strong risk–reward setups	Needs patience and discipline
Reflects real market behavior	Difficult for beginners initially

According to “Thomas Bulkowski” in his Encyclopedia of Chart Patterns, longer patterns have the highest reliability, with a win rate exceeding 60%.

20. Chart Pattern Trading

Chart pattern trading is a type of trading where traders identify repeating price structure on charts to predict the future price movement. The logic behind the chart pattern trading is that market psychology repeats itself, creating recognizable formations such as breakouts, consolidations, and reversals. 

The above chart shows the formation of a cup and handle pattern, which is a bullish setup. A breakout from this structure triggered strong upside momentum, where traders built long positions to capitalize on the move—demonstrating how structured setups work effectively in chart pattern trading.

Pros vs Cons of Chart Pattern Trading

Pros	Cons
Clear visual trade setups	Subjective pattern identification
Defined entry, stop & target	False breakouts are common
Works in trending markets	Needs volume confirmation
Applicable across timeframes	Patterns can fail in choppy markets
Good risk–reward opportunities	Requires patience

21. Contrarian Trading

Contrarian trading is a type of trading where traders take position against the prevailing trend instead of following trend or breakout. Contrarian traders often look for crowded trades, emotional extremes, and exhaustion points where price is likely to reverse. 

The logic is that when traders are majorly either bullish or bearish, risk-reward shifts in favor of the opposite side. Contrarian trading is mostly applied on higher timeframes, as sentiments take time to form. 

As we can clearly see in the chart above, strong optimism of buyers pushed National Aluminum stock price, where buying pressure exhausted creating a possible top. A contrarian trader would look for a short trade at this exhausted point against the trend. 

Pros vs Cons of Contrarian Trading

Pros	Cons
Excellent risk–reward near extremes	Difficult timing
Works well in range-bound markets	Trend can extend longer than expected
Early entries at turning points	Requires strong conviction
Less crowded trades	High drawdowns if mistimed
Capitalizes on emotional markets	Not beginner-friendly

According to backtests published on QuantifiedStrategies.com, the RSI < 20 setup on the S&P 500 demonstrated how Contrarian trading can be effective over the long term. Between 1993–2025, the strategy showed roughly a 75% win rate, delivered an average gain of about 0.6% per trade, generated approximately 7–8% CAGR, remained invested only around 30% of the time, and experienced significantly lower drawdowns (around 25%) compared to a traditional buy-and-hold approach.

22. Value Investing

Value investing is a long-term investment approach where investors buy an undervalued stock relative to its intrinsic value. Value investors analyze fundamentals such as earnings, cash flow, assets, and valuation ratios instead of focusing on short-term price movement. It operates on a longer time horizon.  

The chart above illustrates the statistical valuation of TCS using standard deviation analysis. When stocks trade below its -1 or -2 standard deviation of its valuation, stock is considered as undervalued. Investors use these deviation zones  to identify probable accumulation areas to accumulate the stocks. 

Pros vs Cons of Value Investing

Pros	Cons
Lower downside risk over long term	Capital tied up for long periods
Margin of safety in valuation	Slow return realization
Less trading stress	Underperformance in momentum markets
Benefits from compounding	Requires deep fundamental analysis
Works well in bear or sideways markets	Value traps are possible

According to Arista Wealth analysis of U.S. markets, value investing has historically  outperformed growth stocks by 4.4% since 1927. 

23. Dividend Trading

Dividend trading is an income based strategy where investors buy stocks and receive regular income in form of dividend. Unlike value or growth investing, dividend trading emphasizes cash flow, payout stability, and yield consistency. This strategy operates on bigger timeframes with holding periods ranging from months to multiple years. 

Above chart is a price chart of ITC, which shows the gradual rise in stock price over the time along with dividend. As we can see at the bottom highlighted area of the chart, ITC announced a dividend 2 times in a year with a dividend yield of 3.5 to 4.4%. An investor can buy such fundamentally strong stock for capital appreciation along with dividend income. 

Pros vs Cons of Dividend Trading

Pros	Cons
Regular income stream	Slower capital growth
Lower volatility stocks	Dividend cuts risk
Compounding through reinvestment	Tax implications
Suitable for long-term investors	Underperforms in strong bull markets
Less emotional decision-making	Yield traps possible

A good dividend yield for sustainable long-term investing typically falls between 3-6%, balancing income generation with payout safety and growth potential. Yields above 8% often signal unsustainable dividends or value traps,

24. Insider Trading

Insider trading refers to buying and selling of the securities based on non-public information about the company. This non-public information can include earnings, mergers, regulatory actions, or major corporate decisions. This kind of trading is prohibited worldwide due to unfair advantage. Although, legal insider activity exists only when company insiders trade after proper disclosure and within regulatory limits.

Image above shows the deals and insider activity with name of the stocks and investor, category of investor, their mode of transaction, quantity, price, and value. This legal insider information can be used to speculate the share price for trading and investing. 

Pros vs Cons (From a Market Perspective)

Pros (Perceived)	Cons (Reality)
Early access to critical information	Illegal and unethical
High probability trades	Severe legal penalties
Strong informational edge	Market trust erosion
Predictable outcomes	Criminal charges, fines, bans
Short-term gains	Long-term career destruction

The above-mentioned insider data are considered legal as per regulations. However, Insider Trading becomes illegal when someone trades based on confidential, non-public information to gain an unfair advantage in the market.

25. Smart Money Trading

Smart money trading focuses on tracking and aligning the trade with institutional money such as banks, hedge funds, and large financial players rather than the retail crowd. Smart money traders look for the area with large institutional orders and how liquidity is engineered. This style is commonly applied on higher timeframes for bias and lower timeframes for execution, making it suitable for intraday, swing, and positional trading.

The above Bitcoin chart clearly demonstrates how Smart Money Concepts (SMC) can be used to track institutional direction. A clear Break of Structure (BOS) helps identify the overall trend bias, confirming market strength. After the breakout, a key area of interest forms in the order block zone, where institutions are likely positioned. When price retraces back into this order block and reacts strongly, it validates the zone and continues moving in the original trend direction.

Pros vs Cons of Smart Money Trading

Pros	Cons
Trades aligned with institutions	Steep learning curve
High risk–reward setups	Subjective if not rule-based
Clear market structure logic	Requires multi-timeframe analysis
Works across markets	Over-analysis is common
Emphasizes liquidity & intent	Not beginner-friendly

The concept of SMC was introduced by Michael J. Huddleston, known as The Inner Circle Trader (ICT) in the 2000s, but it gained widespread popularity in 2010 through online forums and videos.

26. Seasonality Trading

Seasonality trading involves analyzing recurring, calendar-based patterns in financial markets. This seasonal pattern arises due to economic cycles, earnings seasons, fiscal years, commodity demand cycles, and behavioral factors. Seasonality trading focuses on a long period with trades often planned from weeks to months. 

Above is the image of Seasonality screener  which shows month wise performance of Nifty 50 over the last 20 years showing the average return of each month in the last 20 years. It shows that the Nifty performs best in the month of April with an average return of 3.3% return. Whereas in the month of February, Nifty gives an average return of -1.4%. Hence, this seasonality indicator helps traders to plan for their trade accordingly. 

Pros vs Cons of Seasonality Trading

Pros	Cons
Based on long-term statistical behavior	Not precise on entry timing
Works well in commodities & indices	Seasonal patterns can weaken
Lower trading frequency	Requires patience
Complements technical & fundamental analysis	Not suitable for scalping
Data-backed probability edge	Macro shocks can disrupt cycles

Although seasonality screener will help you to identify best trading time for any particular asset, it should not be used in isolation, as macro events and structural market changes can disrupt seasonal trends.

27. Sector Rotation Trading

Sector rotation involves shifting of capital from one sector to another based on economic cycles, relative strength, and momentum. Instead of focusing on individual stocks, this approach tracks which sectors are leading, weakening, or improving at different stages of market cycle. Sector rotation trades are executed on higher timeframes which makes it suitable for swing and positional trades. 

The above given Image is the RRG (Relative Rotation Graphs), which shows the rotation of sectors in a cyclical manner from getting weak to strong and from strong to weak. Investors and traders can rotate their funds from a weakening sector to a strong sector to utilize the fund with full potential. 

Pros vs Cons of Sector Rotation Trading

Pros	Cons
Captures broader market trends	Slower signals
Reduces single-stock risk	Requires macro understanding
Works well with ETFs	Rotation timing can lag
High probability in trending markets	Not suitable for short-term trading
Aligns with institutional flows	Sector correlations can change

Sector rotation backtest in the Indian market generated 3-7% annualized alpha over Nifty buy-hold, according to moneycontrol.

28. Stock Trading

Stock trading is the process of buying and selling the shares of publicly listed companies in order to make profits from stock price movement. Stock trading operates only for a specific period of time fixed by exchange. 

Above is the chart of stock of company Tech Mahindra, which is an Indian multinational information technology services and consulting company. The price of the stock dropped after breaking a technical support level, where traders could have profited by short selling the stock.

Pros vs Cons of Stock Trading

Pros	Cons
High liquidity in major stocks	Market volatility risk
Suitable for all experience levels	Requires continuous learning
Multiple strategies and timeframes	Emotional decision-making
Transparent pricing	Capital loss possible
Regulated markets	Returns are not guaranteed

According to an article written by Naylyan Nazifova, the global stock exchange market generated $670 billion in revenue by the end of 2025, where NYSE alone records around 1.5 billion shares traded daily, worth roughly $80 billion. 

29. Forex Trading

Forex trading involves buying and selling of currency pairs in order to make profit from change in exchange rate. Unlike stock trading, forex trading is decentralized and open for 24 hours for five days a week. In forex, the currency price move is influenced by interest rates, inflation, central bank policy, economic data, and geopolitical events which makes forex trading more sensitive to global macro conditions. 

Given above is the price chart of the currency pair GBP and USD, where traders are trading  the fluctuation between the exchange rate of GBP and USD. 

Pros vs Cons of Forex Trading

Pros	Cons
24-hour market access	High leverage risk
Extremely liquid market	Sensitive to macro news
Low capital requirement	Sharp volatility spikes
Easy short-selling	Emotional overtrading common
Tight spreads in major pairs	Weekend gap risk

Forex trading has the highest volume compared to other forms of trading with global forex daily trading volume reaching around $7.5 trillion in April 2025 per BIS Triennial Survey, which 42% increase from 2022. 

30. Crypto Trading

Crypto trading involves buying and selling of cryptocurrencies and digital assets such as Bitcoin, Ethereum, and altcoins to profit from price volatility. Crypto markets are also decentralized, highly speculative, and operate 24/7 where price is driven by liquidity and sentiment rather than traditional fundamentals.

The given image is of the famous crypto currency “Bitcoin” which operates 24/7. Bitcoin is one of the most traded assets due to its volatility, liquidity and 24 hrs access. The average daily trading volume of bitcoin is around 82 Billion USD across major exchanges.  

Pros	Cons
24/7 market access	Extreme volatility
High momentum opportunities	Regulatory uncertainty
Low entry barriers	Market manipulation risk
Strong trend cycles	Frequent false breakouts
Easy access to derivatives	Emotional overtrading common

Crypto is one of the most traded assets in the world due to its volume,liquidity and accessibility. According to btcc, the Crypto trading volumes reached $18.6 trillion in 2026 (spot + derivatives), up 9% from 2025.

31. Commodity Trading

Commodity trading involves buying and selling of the raw materials and primary goods such as oil, gold, silver, natural gas, agricultural products, and base metals. The price of commodities is mainly driven by supply and demand, production levels, weather, geopolitics, and global economic cycle. Commodity trading is widely used to hedge the position and for speculation, usually on a higher timeframe. 

Above is the chart of famously traded commodity “USOIL” where prices fluctuate based on global economic and geopolitics.
Pros vs Cons of Commodity Trading

Pros	Cons
Strong macro-driven trends	High volatility
Effective inflation hedge	Complex fundamentals
Works well with seasonality	Sharp reversals
Diversification from equities	Futures roll-over costs
Clear supply–demand logic	Leverage risk

Commodity is mostly traded through derivatives contracts. The size of global commodity derivative market is around $123 trillion in 2025, per Statista projections. 

32. Futures Trading

Futures trading is a buying and selling of standardized contracts of an asset such as Nifty 50 index, stocks or commodities at a future date, traded on NSE’s F&O segment with high leverage. Futures trading involves hedging, speculation, and arbitrage for intraday/swing strategies due to liquidity and no expiry rush like options.

The above given chart is the chart of ICICI Bank Futures contract which moves exactly the same as the underlying ICICI Bank share. Traders analyse and speculate the share but trade futures to get the advantage of leverage. 

Pros vs Cons of Futures Trading

Pros	Cons
High liquidity and tight spreads	High leverage risk
Easy long and short positions	Margin calls possible
Transparent, exchange-regulated	Requires strict risk control
Works across asset classes	Contract expiry complexity
Efficient hedging tool	Not beginner-friendly

In India, the highest futures trading activity happens in Indexes such as Nifty, Bank Nifty and Commodities such as Gold and other MCX metal. 

33. ETF Trading

ETF trading involves buying and selling of Exchange Traded Funds (ETF), which is a basket of securities that tracks indices, sectors, commodities, bonds, or themes. Unlike trading individual stocks, ETF trading helps to avoid company specific risk through its diversification. ETFs are traded just like stocks on exchanges, commonly used in swing trading, positional trading, and strategic allocation. 

The above given image is the ETF of the Indian IT sector which tracks the basket of major Indian  IT companies like Infosys, HCL, and Wipro. This offers investors an easy and diversified exposure IT sector. 

Pros vs Cons of ETF Trading

Pros	Cons
Diversification reduces risk	Lower volatility limits quick gains
Transparent and regulated	Tracking error possible
Lower capital requirement	Less responsive than single stocks
Ideal for sector rotation	Limited leverage options
Suitable for beginners	Some ETFs have low liquidity

According to a PwC report, the global ETF market is projected to reach $18 trillion by the end of 2026, with the US ETF market dominating at around $14.0 trillion in assets at the beginning of 2026—highlighting the growing importance of ETF Trading worldwide.

34. Bond Trading

Bond trading is buying and selling of debt instruments issued by government, municipalities or corporations. Unlike stocks and crypto, bond prices are affected by interest rates, yield movements, credit risk, and maturity profiles rather than price momentum alone. Bond prices move inversely to interest rate which makes it highly sensitive to central bank policies. Bond trading is generally less volatile and operates on a medium to long-term time horizon. 

Above is the chart of US Government Bonds 10 YR Yield where price is getting affected by  interest rates, yield movements, credit risk, and maturity profiles. Bond traders utilise this fluctuation in bond price to make profits. 

Pros vs Cons of Bond Trading

Pros	Cons
Lower volatility than equities	Lower return potential
Stable income through coupons	Sensitive to rate hikes
Effective portfolio hedge	Complex yield dynamics
Predictable cash flows	Inflation risk
Favored during risk-off phases	Limited short-term opportunities

Global bond markets are much larger than equity markets. According to icma group, the global bond market value is around USD 127–128 trillion in outstanding notional, expected to grow to about USD 167–168 trillion by 2031 at roughly 5.6% CAGR.

35. Metal Trading

Metal trading involves buying and selling of precious metals like gold, silver, platinum or base metals such as copper, aluminium, zinc to profit from their price movements. The price of these metals are affected by inflation, currency strength, industrial demand, geopolitical risk, and global economic cycles. Metal trading is widely used for hedging, diversification and macro positioning, often on medium to longer term time frames. 

As we can see from the chart above, the copper price dropped more than 20% on July 30% 2025, after trump announced a 50% tariff on semifinished copper products. This is how metal prices are affected by geopolitical events where traders and investors can capitalize. 

Pros vs Cons of Metal Trading

Pros	Cons
Strong hedge against inflation	High volatility during news
Clear macro drivers	Sharp reversals possible
Works well in uncertainty	Futures leverage risk
Long-term trend clarity	Influenced by USD strength
Diversification benefits	Requires macro awareness

Among all the metals, gold is the most traded metal and has the largest market share among. According to ebc financial group, the annual global trade and investment of gold flows in the hundreds of billions to over 1 trillion dollars, including physical, ETFs, futures, and OTC instruments.

Which Type of Trading is Best for Beginners?

The best type of trading for beginners is not one that makes the most profits, it’s the one which builds skill, discipline, and consistency. Such strategies include swing, positional, price action and trend trading. 

• Swing Trading: In swing trading, trade lasts for days to week giving enough time to think and learn, easy to manage risk and have less emotional pressure than intraday trading. 
• Position Trading: This helps beginners understand market cycle, requires less screen time and teaches about patience. 
• Price Action Trading: This helps beginners understand how price actually moves, building a strong chart-reading skills. 
• Trend Trading: This type of trading gives fewer false signals than reversals and is easy to combine with indicators. 

As a beginner, traders should focus on building strong fundamentals instead of chasing profits. The above-mentioned strategy helps reduce emotional decisions and build a solid foundation—something that is essential across all Type of Traders, whether intraday, swing, or positional.

What is the Easiest Type of Trading?

Swing trading is considered as the easiest type of trading because it captures short-to-medium term price movements using a bigger timeframe such as 4-hour and daily charts, which helps filter out market noise. Swing trading usually follows simple concepts of support / resistance, and basic price action. 

Since this style works on a higher timeframe, traders have enough time to analyze and plan the trade. It is ideal for beginners, working professionals, and part-time traders who cannot monitor markets all day.

Which Type of Trading is Riskiest?

Option buying is considered as the riskiest type of trading due to its leverage and time decay. In option buying, losses can occur even when the market moves in the expected direction due to theta decay. In option buying, success requires precise timing, strong momentum, and favorable volatility all together. 

Since most options expire worthless, the probability is naturally stacked against buyers, which makes option buying highly risky for beginners—highlighting why understanding the Risk Reward Ratio is critical before entering such trades.

Which Type of Trading is Most Profitable?

Positional trading and swing trading is the most profitable type of trading as it captures large market moves while keeping transaction costs and emotional stress low.

This type of trading is mostly used by professionals and institutions in the Stock Market to generate higher returns through trend-following and position-based strategies. This style benefits from compounding profits over time by riding major trends.

Which Trading Type is Best for Small Capital?

Option buying and swing trading is best for small capital accounts, as it allows to make big profits with limited stoploss. Small accounts need relatively higher percentage returns to grow meaningfully, and both these styles allow making big profits. 

Swing trading offers a stable growth with a bigger time framework, defined stop losses and reduced emotional uncertainty, which makes it more sustainable. Options buying can be used to trade with a very low capital base, and with the aim of making sharp moves, though it is more risky since it is sensitive to time and volatility. Therefore, they both are applicable to small capital, however, rigorous risk management and discipline are necessary to prevent a quick loss of capital.

What is the Best Trading Style for Full-time Employment?

Swing and positional trading is the best trading style for full-time employment because they require minimal screen time and give enough time for decision making. Swing trading involves capturing a price move over days or weeks using a higher timeframe chart making it suitable for working professionals. 

Whereas positional trading extends this approach further, holding trades for weeks to months, giving traders enough time to manage the trade. These styles reduce emotional stress and work well with less availability, making them ideal for traders balancing a full-time job with market participation.

How to Choose the Right Trading Style? 

Choosing the right trading style is not about finding the best strategy, but about finding the style that matches your personality, time availability, capital, and risk tolerance. There are five main criteria you should evaluate to select the right trading style. 

• Time Commitment: If you are available for full time in the market (constant monitoring 9:15 AM-3:30 PM IST), scalping or intraday will suit you. Whereas, part-time traders can choose swing or positional trading. ​

• Risk Tolerance: High stress tolerance suits option buying and intraday trading. Whereas conservative profiles should prefer swing or positions trade. ​

• Capital Size: Intraday cash/futures are best applied to small accounts ( ₹10k-50k), whereas options selling requires ₹1L+ margins.

• Level of experience: Novices can begin with swing trading which involves less emotional strain, whereas  professionals overlay scalping strategies or options strategies.

• Personality: Patient analysts would decide to trade position trading, whereas action-oriented traders would decide to trade day trading.​

When your time, risk tolerance, capital, experience, and personality are in sync with your strategy, consistency and long-term success naturally follow.

What Popular Softwares are used for Trading?

Traders use different software depending on market, strategy, and experience level. The different types of popular software used in trading based on their purpose is mentioned below. 

• Charting & Technical Analysis: Strike Money, TradingView, and MetaTraders 4 /5 are the most popular softwares for charting and analysis.
  
• Indian Trading Platforms: Zerodha Kite, Upstox, Angel One, and Groww are popular trading platforms in India.
  
• Options & Derivatives Tools: Strike.Money, Sensibull, and Opstra are advanced option analytical tools with strategy builder, and Greeks analysis.
  
• Algorithmic & Quant Trading: Amibroker, NinjaTrader, and QuantConnect are some popular backtesting and algo trading platforms.
  
• Portfolio & Investing: Tickertape, screener, and charting are some famous platforms for stock screening and fundamental analysis.

The best Trading Software is the one that fits your market, strategy, and experience level, while offering reliable execution, clean data, and strong analytical tools.