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Written by Sarah Abbas
Fact checked by Antonio Di Giacomo
Updated 30 July 2025
Choosing the best type of trading is a crucial step in your journey as a stock market trader. There are several trading types, each with its own strategy, time commitment, risk level, and profit potential. From intraday trading to swing trading, position trading, and scalping, every trading type offers unique opportunities and challenges.
Understanding these trading types can help you make informed decisions that align with your financial goals, risk appetite, and trading style. Whether you're a beginner or an experienced trader, selecting the right trading type is essential for long-term success in the dynamic world of the stock market.
Choose a trading style that fits your goals and risk tolerance, from fast-paced day trading to long-term position trading.
Short-term trading, like scalping, demands quick decisions, while long-term strategies focus on holding assets for extended periods.
Effective risk management is essential in any trading style to protect against potential losses.
Register for a free demo and refine your trading strategies.
Here are the top 13 types of trading in the stock market to use in your trading strategy:
Day Trading
Swing Trading
Scalping
Position Trading
Momentum Trading
Algorithmic Trading
Social Trading
Copy Trading
News Trading
Technical trading
Fundamental trading
Delivery trading
Event-Driven Trading
The table below provides a comprehensive overview of the 13 best trading types in the stock market. It covers each type of trading, along with a brief description, typical time horizon, key strategies, and whether it’s more suitable for beginners or advanced traders.
Type of Trading
Description
Time Horizon
Key Strategies
Beginners or Advanced Traders
Buying and selling within the same day.
Intraday (minutes to hours)
Scalping, Momentum Trading, Technical Analysis
Full-time traders with market expertise.
Holding positions for days or weeks to capture price swings.
Short to medium-term
Trend Following, Support & Resistance, Technical Indicators
Flexible, part-time traders.
Quick trades for small profits on tiny price movements.
Very short-term (seconds)
Market Making, Order Flow Analysis, Range Trading
Fast-paced traders with low-cost platforms.
Long-term approach focused on major price moves.
Long-term
Buy & Hold, Trend Following, Fundamental Analysis
Investors with a patient, hands-off style.
Profiting from strong price trends before they reverse.
Short-term to medium-term
Breakout Trading, RSI, Moving Averages
Trend-driven, quick decision-makers.
Uses automated programs for executing trades.
Short-term or long-term
Market Making, Arbitrage, Trend-Following
Technically skilled or institutional traders.
Copying or learning from experienced traders.
Varies
Copy Trading, Signal Sharing, Collaborative Learning
Beginners or community-focused traders.
Automatically replicates trades of experienced traders in real time.
Auto Copying, Manual Adjustments, Multi-Trader Portfolios
Passive traders and beginners.
Trading based on market reactions to economic or geopolitical news events.
Short-term
Pre-News Positioning, Post-News Reaction, Straddle Strategy
Fast-reacting traders with news access.
Technical Trading
Trading based on chart patterns, indicators, and price action.
Any (flexible)
Trend Following, Breakouts, Oscillator Signals
Chart-focused traders across all timeframes
Fundamental Trading
Trading based on economic data, company performance, and intrinsic value.
Medium to long-term
Earnings Plays, Macroeconomic Analysis, Value Investing
Research-oriented traders and long-term investors
Delivery Trading
Buying and holding shares beyond the trading day in a demat account.
Buy & Hold, Sector Rotation, Dividend Investing
Long-term investors building equity portfolios
Trading based on impactful events like earnings, M&A, or policy changes.
Merger Arbitrage, Earnings Plays, Regulatory Trades
Fast-acting traders with fundamental insight
Day trading is among the most popular and widely recognized types of stock trading, particularly among those who enjoy fast-paced action and instant results.
In day trading, all positions are opened and closed within the same trading day, meaning no positions are held overnight.
The core idea behind day trading is to capitalize on small price movements within a single day.
Day traders usually make multiple trades throughout the day, aiming to profit from minute fluctuations in stock prices.
This stock trading type requires significant time, attention, and discipline, as decisions must be made quickly.
Some of the best day trading strategies include:
Scalping: This involves making numerous small trades throughout the day, aiming to gain a few cents per trade. Volume is key. Traders rely on many trades to build significant profits.
Momentum Trading: In this strategy, traders look for stocks that are moving significantly in one direction with high volume. They buy when the stock is gaining momentum and sell when it starts to lose steam.
Technical Analysis: Day traders often use charts, patterns, and indicators like moving averages and Bollinger Bands to predict price movements.
While day trading can be highly profitable, it’s also risky. The fast-paced nature of this type of stock trading style means that significant losses can occur just as quickly as gains. It’s best suited for experienced traders who can devote full attention to the markets during market hours.
Swing trading is a type of trading that falls somewhere between day trading and long-term investing. Unlike day trading, swing traders hold their positions for several days or even weeks, aiming to profit from “swings” in the market.
Swing traders focus on capturing a portion of an expected price move. While day traders look at minute-to-minute price changes, swing traders look at trends that play out over several days.
This is considered one of the most profitable trading types that allows more flexibility, as you don’t need to be glued to your computer screen all day.
Some effective swing trading techniques include:
Trend Following: This involves identifying the overall direction of the market and making trades that align with this trend. If the market is trending upwards, for example, a swing trader might look to buy stocks that are expected to continue rising.
Support and Resistance: Swing traders often use support and resistance levels to make trading decisions. They might buy when a stock’s price bounces off a support level or sell when it hits resistance.
Technical Indicators: Like day traders, swing traders also rely on technical analysis, but they focus on longer timeframes, such as daily or weekly charts.
The main difference between swing trading and day trading is the time horizon. Swing trading is less time-intensive and allows for more considered decision-making, making it a good option for those who can’t dedicate their entire day to trading.
Aspect
Holding Period
Few days to weeks
Intraday (closed same day)
Trade Frequency
Low (few trades per week)
High (multiple trades per day)
Time Commitment
Moderate (check charts occasionally)
High (full-time monitoring)
Profit Per Trade
Larger (targets bigger moves)
Smaller (scalps short moves)
Scalping is a very short-term trading style that involves making dozens or even hundreds of trades in a single day, each aiming for tiny profits.
The idea is to accumulate small gains that can add up to significant profits by the end of the day.
Scalpers hold their positions for seconds or minutes. They aim to capitalize on small price movements, often relying on bid-ask spreads and minute market fluctuations.
Due to the high frequency of trades, scalping requires access to highly liquid markets, fast execution platforms, and low trading fees.
Effective scalping techniques include:
Market Making: This involves placing buy and sell orders at slightly different prices to profit from the bid-ask spread.
Order Flow Analysis: Scalpers often analyze the order book to identify potential short-term price movements.
Range Trading: This technique involves identifying key support and resistance levels and making trades within that range.
While both scalping and day trading involve short-term trades, scalping is much more rapid and requires a different mindset.
Scalping demands quick reflexes and an ability to make split-second decisions, while day trading, though fast-paced, allows for a bit more deliberation.
Seconds to a few minutes
Minutes to hours (closed same day)
Very high (dozens+ per day)
Profit per Trade
Very small
Small to medium
Extremely high
High
Pros and Cons of Scalping
Scalping is a fast-paced trading style focused on making dozens, or even hundreds, of small trades per day. It aims to profit from tiny price movements, often lasting just seconds. While it offers frequent trading opportunities, it also requires intense focus, lightning-fast execution, and a high tolerance for stress and risk.
Position trading is a long-term approach that involves holding positions for weeks, months, or even years. The best type of trading is more akin to investing, as it relies on fundamental analysis and long-term market trends.
Position traders aim to profit from large price movements over an extended period. They are less concerned with short-term market fluctuations and more focused on the overall direction of a stock or market.
Because this type of stock trading involves holding positions for a long time, it’s crucial to thoroughly understand the underlying asset and its growth potential.
Some of the best trading type strategies for position traders include:
Buy and Hold: This strategy involves buying a stock with the expectation that it will increase in value over time, regardless of short-term market movements.
Trend Following: Like swing traders, position traders often follow trends but on a much longer timeframe. They might hold onto a stock for several months or even years if the trend is strong.
Fundamental Analysis: Position traders rely heavily on fundamental analysis, evaluating a company’s financial health, industry position, and economic conditions to make their decisions.
Position trading is a long-term approach that involves holding trades for weeks, months, or even years. It’s ideal for traders who prefer a more passive style and want to capture major market trends.
While this strategy reduces the need for constant monitoring, it also exposes traders to prolonged market risks and requires strong discipline to hold through volatility.
Position trading contrasts sharply with short-term trading styles like day trading and scalping. It’s better suited for those who prefer a more hands-off approach and are comfortable with the patience required to see their trades through.
Momentum trading is a type of trading that involves buying stocks that are showing strong upward momentum and selling them once they start to lose steam. The goal is to ride the wave of a stock’s price surge for as long as possible.
Momentum traders look for stocks that are moving in one direction with high volume and ride that trend until it shows signs of reversing. This type of trading requires quick decision-making and a keen eye for market trends.
Effective momentum trading strategies include:
Breakout Trading: This involves entering a trade when a stock breaks through a significant price level, such as a previous high, with high volume. The idea is to catch the stock as it begins its upward momentum.
Relative Strength Index (RSI): Momentum traders often use RSI indicator to identify overbought or oversold conditions. A stock with a high RSI might be a candidate for a momentum trade if it continues to show strength.
Moving Averages: Traders use moving averages to smooth out price data and identify the direction of the trend. A crossover of moving averages can signal the start of a momentum trade.
Momentum trading can be highly profitable, but it also comes with significant risks. Stocks can change direction quickly, so it’s important to have a solid risk management plan in place, such as setting stop-loss orders to protect against sudden reversals.
Momentum trading focuses on identifying and riding stocks that are moving strongly in one direction with high volume. It offers quick profit potential when trends are strong, but requires precise timing and fast decision-making.
Since trends can reverse suddenly, momentum trading carries high risk and is best suited for active traders who can react quickly to market shifts.
Algorithmic trading, or algo-trading or automated trading, involves computer programs executing trades based on predefined criteria.
This type of trading can be used in short-term and long-term strategies and is popular among institutional traders and hedge funds.
In algorithmic trading, a trader creates a set of rules for trade entries and exits, which are then programmed into a computer.
The algorithm continuously monitors the market and executes trades when the conditions are met. This can involve simple strategies, such as buying a stock when its price crosses above its moving average, or more complex strategies that factor in multiple indicators and market conditions.
This advanced technique is one of the most sophisticated types of trading in stock market.
There are several types of algorithmic trading strategies, including:
Market Making: Algorithms are used to simultaneously place buy and sell orders for the same asset, profiting from the bid-ask spread.
Arbitrage: This strategy involves taking advantage of price differences between markets or exchanges.
Trend-Following: Algorithms can be programmed to follow long-term trends, entering trades when certain technical indicators are met.
Algorithmic trading offer several advantages, such as executing trades at high speeds, removing emotional bias, and backtesting strategies using historical data.
However, it also comes with challenges, including the need for technical expertise, the risk of software errors, and the potential for market disruptions caused by high-frequency trading.
Social trading is a modern type of trading that allows traders to observe, follow, and replicate the trades of experienced traders within an online trading community or platform.
It leverages social networks and financial market tools to enable less-experienced traders to learn from experts and make informed trading decisions.
Social trading platforms are a hub where traders can share insights, analyze performance, and copy trades directly. Users can browse profiles of seasoned traders, view their trading history, and follow or automatically copy their trades in real time.
This approach eliminates the need for extensive market analysis, as the expertise of others informs decisions. It’s an accessible way to participate in the market and learn from more experienced traders.
Some effective social trading techniques include:
Copy Trading: Copy trading automatically replicates the trades of top-performing traders in your own account, either partially or entirely.
Signal Sharing: Experienced traders share signals or recommendations, and followers can act on these suggestions manually.
Collaborative Learning: Engaging with the trading community to discuss strategies, market trends, and analysis, enhancing decision-making.
Social trading allows individuals to follow and copy the trades of experienced investors through online platforms. It’s accessible to beginners and helps shorten the learning curve, but it also involves relying on others’ strategies, which may not always align with your risk tolerance or financial goals. Due diligence is essential to avoid blindly following underperforming traders.
Unlike traditional trading, which requires significant market knowledge and independent analysis, social trading simplifies the process by relying on the expertise of others.
Social trading blends the benefits of passive investing with the dynamism of active trading, making it a contender for the most profitable trading type for many participants.
Copy trading is a modern, user-friendly approach that enables traders to automatically replicate the trades of more experienced and successful investors. It’s a subset of social trading but focuses specifically on mirroring real-time trades.
In copy trading, you select a professional trader (often called a signal provider) based on their performance metrics, trading style, and risk level. Once connected, every time they open or close a trade, the same action is executed in your account proportionally. You retain full control and can start, stop, or adjust the copy at any time.
This approach significantly lowers the barrier to entry for beginners, allowing them to participate in the market while learning by observation.
Popular techniques used in copy trading include:
Full Auto Copying: Automatically mirror all trades and risk parameters of the selected trader without manual intervention.
Manual Adjustment: Follow the strategy but change trade size, stop loss, or take profit to suit your risk profile.
Diversified Copy Portfolios: Copy multiple traders to spread risk across strategies and instruments.
Copy trading lets you automatically replicate the trades of selected professional traders in real time. It’s a hands-off approach ideal for beginners or those with limited time, offering exposure to the markets without active involvement. However, success depends heavily on the chosen trader’s performance, and losses are still your responsibility, even if the strategy isn’t yours.
While social trading emphasizes interaction and learning from others, copy trading automates execution. It’s more passive and ideal for those who prefer a hands-off strategy but still want to benefit from expert insights.
How It Works
Auto-copies trades from selected traders
Follows shared ideas in a trading community
Execution
Fully automated
Manual or semi-automated
Control
Minimal once trader is chosen
User decides when and what to trade
Skill Needed
Beginner-friendly
Good for beginners and learners
Learning
Low (passive)
High (community-based insights)
News trading is a time-sensitive strategy that aims to profit from market movements caused by economic events, geopolitical developments, or breaking news. This style of trading is fast-paced and often used around scheduled data releases.
News traders monitor economic calendars and news feeds for high-impact announcements such as interest rate decisions, GDP reports, or central bank meetings. These events often create sharp price movements within seconds, offering opportunities for quick profits, but also increasing risk.
To succeed, news traders must act quickly, have access to low-latency execution platforms, and understand how the market is likely to react to the data.
Effective news trading strategies include:
Pre-News Positioning: Taking positions based on expected outcomes of major announcements.
Post-News Reaction: Trading the immediate price reaction once the news is released.
Straddle Strategy: Placing simultaneous buy and sell orders before the news, catching the breakout direction either way.
News trading involves placing trades based on market-moving news events, such as economic releases, central bank decisions, or geopolitical developments. It can lead to rapid profits when markets react sharply, but also comes with high volatility, slippage, and unpredictable price spikes. This style requires quick execution, strong market awareness, and careful risk management.
Technical trading is a strategy that relies on chart patterns, indicators, and price action to make trading decisions. Rather than focusing on company fundamentals, technical traders believe that all relevant information is already reflected in the price.
Traders analyze historical price data, trading volume, support and resistance levels, and chart patterns to predict future movements. This approach is used across various timeframes and asset classes.
Effective technical trading strategies include:
Trend Following: Buying in an uptrend and selling in a downtrend using indicators like moving averages.
Breakout Trading: Entering trades when price breaks through established levels.
Oscillator-Based Signals: Using tools like RSI or MACD to find overbought or oversold conditions.
Technical trading allows for precise entry and exit points and is highly adaptable across markets. However, it requires experience interpreting patterns and may produce false signals during choppy or low-volume conditions.
Fundamental trading involves analyzing a company’s financial statements, industry health, and macroeconomic conditions to estimate its true value. Traders monitor events such as earnings reports, central bank announcements, inflation data, and political developments to anticipate market direction.
When an asset is undervalued or overvalued compared to its fundamentals, traders position accordingly, often holding for longer durations to let value play out.
Traders assess a company's earnings, revenue, debt, market conditions, and economic data to determine whether an asset is overvalued or undervalued, then position accordingly.
Some of the best trading type strategies for fundemantal traders include:
Earnings-Based Trading: Buying or selling based on quarterly earnings reports.
Macroeconomic Analysis: Using GDP, inflation, and interest rate data to guide trades.
Value Investing: Long-term buying of undervalued assets for future growth.
This approach provides deeper insights into long-term value but often lags during short-term market volatility. It also requires extensive research and patience.
Delivery trading is a traditional form of stock trading where shares are bought and held in a demat account for more than one day. It is common among investors with a long-term perspective.
In delivery trading, investors purchase stocks through a brokerage and hold them in their demat (electronic) account beyond the trading day, often for months or years. This method avoids intraday settlement obligations and gives full ownership of the asset, including dividend rights. It’s a simple, long-term strategy used to build wealth gradually through capital appreciation and income from dividends.
Delivery trading strategies include:
Buy and Hold: Purchasing quality stocks with strong fundamentals for long-term gains.
Sector Rotation: Shifting investments across different sectors based on macro trends.
Dividend Investing: Choosing stocks that offer regular dividend payouts.
Delivery trading is low-risk compared to intraday strategies and avoids time constraints. However, it requires significant capital and offers slower returns.
Event-driven trading is a strategy that seeks to profit from volatility and price movements caused by specific market events such as earnings releases, mergers, or regulatory decisions. It combines elements of both fundamental and speculative analysis.
This type of trading focuses on identifying upcoming events that could significantly impact asset prices. Traders either position themselves ahead of the event based on predictions or react immediately after the event to capitalize on the price movement. It requires fast decision-making, a deep understanding of market reactions, and access to timely information.
Some of the event-driven strategies include:
Merger Arbitrage: Buying the stock of a company being acquired and shorting the acquirer.
Earnings Plays: Trading before or after quarterly results based on expectations or earnings surprises.
Policy/Regulation-Based Trades: Acting on news like FDA approvals or central bank statements.
Event-driven trading offers high-reward opportunities in short timeframes but carries high risk due to unpredictability, slippage, and news misinterpretation. It suits experienced traders who can manage volatility and react quickly.
Understanding the different types of trading is essential for anyone looking to succeed in the financial markets. From rapid-fire methods like scalping and news trading to longer-term approaches such as position and delivery trading, each style offers unique advantages and challenges.
By exploring these trading styles and implementing the best trading strategies, you can find the approach that best suits your goals and risk tolerance to start your trading journey in 2025!
Take the time to explore, test, and refine your preferred approach, because in trading, informed decisions are your greatest asset.
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Put your knowledge into action by opening an XS trading account today
The swing trading type of trading is often recommended for beginners in 2025 because it offers a balanced pace, allowing new traders to analyze charts and trends without the pressure of rapid intraday decisions.
To choose the right trading type, consider your risk tolerance, time availability, capital, and trading experience.
If you prefer quick trades and can monitor markets constantly, intraday or scalping may suit you.
If you're looking for a less time-intensive and more strategic approach, swing or position trading is ideal.
Testing different styles in a demo account before committing real capital is a smart way to find what fits you best.
No trading type is entirely risk-free, but position trading is generally considered less risky than others. Since it focuses on long-term trends and fundamentals, it’s less affected by short-term market volatility.
Scalping: Seconds to minutes | Very high risk | High capital, fast execution.
Intraday: Same day | High risk | Moderate to high capital.
Swing: Days to weeks | Moderate risk | Moderate capital.
Position: Months to years | Low to moderate risk | Long-term capital.
Algorithmic: Varies | Risk depends on strategy | High setup cost, scalable.
Each trading type varies by duration, risk level, and the capital or tools required.
The most profitable trading depends on the trader's skills, market knowledge, and strategy. Momentum trading and swing trading are often considered highly profitable due to their balance of risk and reward.
Yes, many experienced traders combine trading types to diversify their approach. For example, you might use position trading for long-term investments while engaging in swing trading or intraday trades to capitalize on short-term market movements.
SEO content writer
Sarah Abbas is an SEO content writer with close to two years of experience creating educational content on finance and trading. Sarah brings a unique approach by combining creativity with clarity, transforming complex concepts into content that's easy to grasp.
Market Analyst
Antonio Di Giacomo studied at the Bessières School of Accounting in Paris, France, as well as at the Instituto Tecnológico Autónomo de México (ITAM). He has experience in technical analysis of financial markets, focusing on price action and fundamental analysis. After many years in the financial markets, he now prefers to share his knowledge with future traders and explain this excellent business to them.
This written/visual material is comprised of personal opinions and ideas and may not reflect those of the Company. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. XS, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same. Our platform may not offer all the products or services mentioned.
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