Types of stock trading

There are several types of stock trading based on profit expectations and on the time frame of completed trades. I divide them into these categories:

• Day trading is for very short-term trades. A day trader holds a position only for one day. No position is held overnight. Such traders use intra-day charts with a very short primary time frame like 3 minutes, 5 minutes, or 10 minutes. Their trades last from several minutes to several hours.
• Swing trading is based on daily charts. Trades can last from one day up to several days or a few weeks. This is my favorite time frame. The basic type of chart is a daily one. Some swing traders also use 240-minute (4-hour) charts as the primary time frame. I like these 4-hour charts too. See my charts setup for my analysis.
• Position trading is based on weekly charts. Such trades can last much longer. A typical holding period is between 1 month and 6 months.

Any of these approaches can make money. But if you plan to generate regular income from trading, you have to consider a shorter time frame for trading (day trading or swing trading). Position trading is good if you want to create more wealth.

I like to use the same stock for swing trading and for position trading. When I find stock with a nice chart for a position trade, it also often means several possibilities for a swing trade in the same stock.

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